NASDAQ:MYRG MYR Group Q3 2023 Earnings Report $205.08 -1.93 (-0.93%) As of 11:46 AM Eastern This is a fair market value price provided by Polygon.io. Learn more. ProfileEarnings HistoryForecast MYR Group EPS ResultsActual EPS$1.28Consensus EPS $1.30Beat/MissMissed by -$0.02One Year Ago EPS$1.09MYR Group Revenue ResultsActual Revenue$939.50 millionExpected Revenue$877.48 millionBeat/MissBeat by +$62.02 millionYoY Revenue Growth+17.50%MYR Group Announcement DetailsQuarterQ3 2023Date10/25/2023TimeAfter Market ClosesConference Call DateThursday, October 26, 2023Conference Call Time10:00AM ETUpcoming EarningsMYR Group's Q3 2025 earnings is scheduled for Wednesday, October 29, 2025, with a conference call scheduled on Thursday, October 30, 2025 at 10:00 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Conference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Quarterly Report (10-Q)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by MYR Group Q3 2023 Earnings Call TranscriptProvided by QuartrOctober 26, 2023 ShareLink copied to clipboard.Key Takeaways Q3 2023 revenue reached a record $939 million, up 17% year-over-year, driven by record highs in the T&D segment ($549 million, +21%) and C&I segment ($391 million, +12%). Gross margin declined to 9.8% from 10.8% a year ago due to labor and project inefficiencies, supply chain disruptions, inclement weather, and inflation, partly offset by favorable change orders and improved productivity. Total backlog grew 6% year-over-year to $2.62 billion, split between $1.14 billion for T&D and $1.48 billion for C&I, reflecting healthy bidding activity and Master Service Agreements. Long-term market drivers such as electrification, clean energy, grid modernization, and growth in data centers, healthcare, transportation, and manufacturing underpin potential future growth opportunities across both segments. MYR maintains a strong balance sheet with $292 million in working capital, $62 million of funded debt, $432 million of available credit facilities, and a 0.33x funded debt/EBITDA leverage ratio to support organic growth, acquisitions, and share repurchases. AI Generated. May Contain Errors.Conference Call Audio Live Call not available Earnings Conference CallMYR Group Q3 202300:00 / 00:00Speed:1x1.25x1.5x2xThere are 8 speakers on the call. Operator00:00:00Good morning, everyone, and welcome to the MYR Group Third Quarter 2023 Earnings Results Conference Call. At this time, all participants are in listen only mode. After the speakers' presentation, there will be a question and answer session. Today's conference is being recorded. At this time, for opening remarks and introductions, I would like turn the conference over to David Gutierrez, Corporate Services. Operator00:00:38Please go ahead, David. Speaker 100:00:42Thank you, and good morning, everyone. I'd like to welcome you to the MYR Group conference call to discuss the company's 3rd quarter results for 2023, which were reported yesterday. Joining us on today's call are Rick Schwartz, President and Chief Executive Officer Kelly Huntington, Senior Vice President and Chief Financial Officer Todd Cooper, Senior Vice President and Chief Operating sir, of MYR Group's Transmission and Distribution segment and Don Egan, Senior Vice President and Chief Operating Officer of MYR Group's Commercial and Industrial segment. If you did not receive yesterday's press release, please contact Dresner Corporate Services at 312-726 3,600 and we will send you a copy or go to the MYR Group website where a copy is available under the Investor Relations tab. Speaker 200:01:35Also, a Speaker 100:01:35webcast replay of today's call will be available for 7 days on the Investors page of the MYR Group website atmyrgroup.com. Before we begin, I want to remind you that this discussion may contain forward looking statements. Any such statements are based upon information available to MYR Group's management as of this date, and MYR Group It assumes no obligation to update any such forward looking statements. These forward looking statements involve risks and uncertainties that could cause actual results to differ materially from the forward looking statements. Accordingly, these statements are no guarantee of future performance. Speaker 100:02:17These risks and uncertainties are discussed in the company's annual report on Form 10 ks for the year ended December 31, 2022, The company's quarterly report on Form 10 Q for the Q3 of 2023 and in yesterday's press release. Certain non GAAP financial information will be discussed on the call today. A reconciliation of these non GAAP measures to the most Comparable GAAP measures is set forth in yesterday's press release. With that said, let me turn the call over to Rick Schwartz. Speaker 300:02:52Thanks, David. Good morning, everyone. Welcome to our Q3 2023 conference call to discuss financial and operational results. I will begin by providing a summary of the 3rd quarter results and then we'll turn the call over to Kelly Huntington, our Chief Financial Officer, for a more detailed financial review. Following Kelly's overview, Todd Cooper and Don Egan, Chief Operating Officers of our T and D and C and I segments will provide a summary of our segment's performance and discuss some of MYR Group's opportunities going forward. Speaker 300:03:23I will then conclude today's call with some closing remarks and open the call up for your questions. The strength of our long term customer relationships and a strong market position resulted in a steady 3rd quarter performance. Our teams continue to execute projects with operational excellence and expand existing client relationships through master service and alliance agreements across our districts. Bidding activity remains healthy as we are strategically pursue and capture new opportunities that position us for potential future growth. A growing demand for electrification, a continued emphasis on the clean energy sources And a focus on grid modernization and hardening continue to be strong market drivers and could present opportunities for consistent success across our business. Speaker 300:04:13The 2023 North American electric transmission forecast released in September by the C3 Group indicates a strong potential for healthy growth moving forward as electricity demand continues to increase across the country. The report projects $172,000,000,000 of spending on new transmission or upgrades over the next 5 years from the top 20 investor owned utilities. Carbon reduction goals and clean energy targets are other potential spend drivers in the T and D market. We continue to track these major transmission expansion projects and clean energy initiatives that may lead to future work opportunities and growth, while remaining committed to executing existing projects for our valued customers. In our C and I segment, Industrial spend projections are positive in our key markets such as data centers, healthcare, transportation And manufacturing, even as the overall commercial markets are forecasted to slow down into 2024. Speaker 300:05:18By expanding existing relationships with our preferred clients and strategically bidding and expanding work in our chosen markets, We continue to experience a steady backlog of work and could see potential growth moving forward. The commitment And solution orientated mindset of our people allows us to remain at the forefront of the industry And provide our clients with excellent service and customer experience, backed by safe and reliable execution. Our steady Q3 performance is a result of their tireless efforts and I would like to thank them for their fostering our strong culture. Now, Kelly will provide details on our Q3 2023 financial results. Speaker 400:06:02Thank you, Rick, and good morning, everyone. Our Q3 2023 revenue was $939,000,000 a record high, which represents an increase of $140,000,000 or 17% compared to the same period last year. Our 3rd quarter T and D revenues were $549,000,000 a record high for our T and D segment and an increase of 21% compared to the same period last year. The breakdown of T and D revenues was $358,000,000 for transmission and $191,000,000 for distribution, Both record. P and D segment revenues increased due to higher revenue on transmission projects, primarily related to higher revenue on clean energy projects. Speaker 400:06:54Work performed in our master service agreements continue to represent approximately 50% of our T and D revenue. C and I revenues were $391,000,000 a record high for our C and I segment and an increase of 12% compared to the same period last year. C and I revenues increased primarily due to higher revenue related to clean energy projects in certain geographical areas. Our gross margin was 9.8% for the Q3 of 2023 compared to 10.8% for the same period last year. The decrease in gross margin was primarily due to labor and project inefficiencies, some of which were caused by supply chain disruptions and inclement weather. Speaker 400:07:42Gross margin was also negatively impacted by rising costs associated with inflation. These margin decreases were partially offset by favorable change orders and better than anticipated productivity on certain projects. G and D operating income margin was 6.6% for the Q3 of 2023 compared to 7.6% for the same period last year. The decrease was primarily due to labor and project inefficiencies, mainly related to clean energy projects as well as inclement weather. These decreases were partially offset by better than anticipated productivity. Speaker 400:08:24C and I operating margin was 3.6% for the Q3 of 2023 compared to 3.1% for the same period last year. The increase was primarily due to favorable change orders and better than anticipated productivity on certain projects. These increases were partially offset by labor and project inefficiencies, which were caused by supply chain disruptions And inclement weather. C and I operating income margin was also negatively impacted by rising costs associated with inflation. Q3 2023 operating expenses were $60,000,000 an increase of $1,000,000 compared to the same period last year. Speaker 400:09:06The increase was primarily due to higher employee incentive compensation costs and higher employee related expenses to support the growth in our operations. 3rd quarter 2023 interest expense was $1,000,000 an increase of $200,000 compared to the same period last Sure. The increase was primarily due to higher interest rates, partially offset by lower average debt balances during the Q3 of 2023 as compared to the same period last year. 3rd quarter 2023 net income was $22,000,000 compared to $18,000,000 for the same period last year. Net income per diluted share of $1.28 increased 17% compared to $1.09 for the same period last year. Speaker 400:09:573rd quarter 2023 EBITDA was $47,000,000 compared to $40,000,000 for the same period last year. Total backlog as of September 30, 2023 was $2,620,000,000 6 percent higher than a year ago. Total backlog as of September 30, 2023 consisted of $1,140,000,000 for our T and D segment Operator00:10:23and $1,480,000,000 Speaker 400:10:25for our C and I segment. 3rd quarter 2023 operating cash flow was $13,000,000 compared to operating cash flow of $14,000,000 for the same period last year. 3rd quarter 2023 free cash flow was negative $10,000,000 compared to free cash flow of negative $4,000,000 for the same period last year, with the decrease primarily due to higher capital expenditures to support our continued growth. Moving to liquidity and our balance sheet. We had $292,000,000 of working capital, dollars 62,000,000 of funded debt and $432,000,000 in borrowing availability under our credit facility as of September 30, 2023. Speaker 400:11:09We have continued to maintain a strong funded debt to EBITDA leverage ratio of 0.33 times as of September 30, 2023. We believe that our credit facility, strong balance sheet and future cash flow from operations will enable us to meet our working capital needs, support the organic growth of our business, pursue acquisitions and opportunistically repurchase shares. I'll now turn the call over to Todd Cooper, who will provide an overview of our transmission and distribution segments. Speaker 500:11:43Thanks, Kelly, and good morning, everyone. Our T and D segment's steady financial performance in the 3rd quarter Demonstrates the strength of our long term customer relationships and the reliability of our sound business principles. Our districts continue to maintain and expand strong client relationships, while a healthy bid environment and strategic wins throughout our markets That produced a very nice backlog of work. As Rick mentioned, we're seeing significant investments in electrical infrastructure throughout North America, including many transmission upgrades, substation expansions and distribution hardening programs. According to the 2023 North American electric transmission forecast recently released by the C3 Group, The total electric transmission capital spend in 2022 was over $43,000,000,000 It is forecasted to grow as high as $67,000,000,000 in 20.27. Speaker 500:12:45This investment Is expected across the country with Texas and California, 2 focus areas for MYR Group having the highest planned transmission capital expenditures. The report also indicated that significant load growth driven by hyperscale data centers is increasing the need For additional substation infrastructure and transmission interconnections around North America. Overall, the C3 report Stated that investor owned utilities represent roughly 60% of the total U. S. Electric transmission market and it is considered the most stable and predictable of all sectors. Speaker 500:13:24The need for new and upgraded electrical infrastructure has the potential to create future opportunities for our business. Our traditional T and D operations continued their strong execution of work throughout our operating territories. Our Eastern region was awarded Transmission line projects as well as substation expansions and upgrades to the Q3. The subsidiary of the L. E. Speaker 500:13:49Myers Company Extended several master service agreements in multiple districts and continues to bid others. Wally Escudas and Harlan Electric executed 3 year MSA. In our Western region, we continue to expand work with trusted long term clients, including a fast track storm damage transmission line repair project in Texas by Great Southwestern Construction. Rising labor costs and project inefficiencies, Some weather related and most notably in the solar market persisted across the segment. These along with supply chain disruptions impacted financial results for Q3. Speaker 500:14:28While we see rising labor costs stabilizing, our strategic insight survey of clients conducted this year To shed some light on supply chain constraints our clients face, to help mitigate supply chain constraints, our clients are expanding their roster of suppliers And working diligently with them to form better working relationships. MYR Group also continues to work in close collaboration with our robust network of vendors And our customers to help mitigate supply chain challenges and advance projects to successful completion. In summary, our T and D segment remains committed to partnering with our valued customers, safely provide excellent project delivery, While strengthening and expanding those relationships for mutually beneficial outcomes and thank you to our talented employees helping us reach our high quality standards every day. We are excited about the outlook of the T and D industry and look forward to playing a key role in helping to meet the future demand of North America. I will now turn the call over to Don Egan, who will provide an overview of our Commercial and Industrial segment. Speaker 200:15:39Thanks, Todd, and good morning, everyone. The 3rd quarter saw steady performance in the C and I segment As we continue to strengthen and leverage strong relationships with our valued customers, while professionally executing projects And strategically bidding opportunities in our chosen core markets. As Rick mentioned earlier, while overall commercial spending is forecasted for A slight slowdown going into 2024. There are positive signs of growth in our chosen markets such as data centers, Healthcare, Transportation and Manufacturing. The consensus construction forecast from the American Institute of Architecture released in July Projects growth in industrial construction spending into 2024, particularly in public safety with a forecasted 5.3% increase and healthcare at a projected 3% increase. Speaker 200:16:32Data centers remain an active and high demand market due to shifts toward hybrid cloud environments And increasing use of artificial intelligence and forecast predict record growth in the market. According to a report from McKinsey and Company released Earlier this year, demand for data center projects is forecasted to grow by 10% year over year, reaching 35 gigawatts by 2,030, More than doubling current consumption. These encouraging forecasts could generate growth for our business And we continue to leverage our expertise to place us in a leading position to win opportunities in these markets. Our backlog of work remains steady in the C and I segment, thanks to strong long term relationships with clients And our subsidiaries continue to see healthy bidding activity in key markets across North America. Transportation projects remain underway in Colorado and Vancouver, As well as data center build outs and upgrades across our C and I business. Speaker 200:17:33Sturgeon Electric continues to execute pharmaceutical projects in Colorado, while closely monitoring opportunities for additional battery storage, solar and electrical vehicle charging station projects. CSI Electrical Contractors in Hewlett Electric continued to serve clients in the clean energy space, executing both solar and energy storage work, while also seeing solid bidding opportunities for additional work in those markets. Supply chain and material headwinds persist in the C and I segment. Although we have seen some improvements in the second half of twenty twenty three, we continue to work closely with our vendors and clients to mitigate these challenges And best serve them with exceptional project delivery. It is thanks to the tireless effort of our experienced and committed employees That we continue to overcome obstacles, maintain a healthy pipeline of work and remain a trusted and agile partner for our valued customers. Speaker 200:18:31I would like to thank all of our employees for their hard work and placing us in a position to succeed. Thanks everyone for your time today. I will now turn the call back to Rick, who will provide us with some closing comments. Speaker 300:18:45Thank you for those updates, Kelly, Todd and Don. Our Q3 2023 performance illustrates the strength of our core markets, our ability to maintain and expand long term customer relationships And our ongoing commitment to strong operating principles and sound business strategies. We recognize the importance of adapting to market conditions And being an agile partner for our customers as we respond to industry changes. This is supported by our continued investment and development of our teams Who enable us to maintain our status as an industry leader by the work they perform each day. Thank you to every employee for your dedication And invaluable contributions to the organization. Speaker 300:19:28It does not go unnoticed. And finally, I want to thank each of you for your continued support of MYR Group. Operator, we are now ready to open the call up for comments and questions. Operator00:19:49Thank you. At this time, we will conduct a question and answer session. And standby while we compile our Q and A roster. Our first question comes from Justin Hauke of The Beard Company. Please go ahead. Speaker 600:20:19Yes. Hi, good morning, everyone. I guess Good Speaker 300:20:23morning, Justin. Speaker 600:20:24Good morning. My first question here was, You guys called out 130 basis point impact to gross margin from estimate revisions on your fixed price contracts. I guess I was just hoping to get a little bit more detail on that. I mean, was that primarily weather related as kind of a one time thing for the quarter? And then also maybe the split between the segments Speaker 300:20:49and how that fell through. Speaker 600:20:50I would assume it's mostly in T and D. Speaker 300:20:53It was mostly in T and D and it was primarily on our solar side of the business, the clean energy side, where we had some weather impacts on projects. We had some, As Todd said in his script, some rising labor costs that affected us on a few projects and some design issues that we're working through. So that was primarily where it was at. The rest of the T and D performed pretty well as expected. Speaker 600:21:18Okay. And then I guess Maybe a follow-up to that is just looking into 4Q and typically seasonally 3Q Is a higher margin, more profitable quarter, but to your previous point, it sounds like there were some kind of one time things here. But If I look at the estimates that are out there for 4Q, the EBITDA margins are materially higher than 3Q. So I guess, I mean, just the tenor of maybe the margin contribution that you would see out there. I mean, is 3Q kind of usually Light and maybe the better comparison for 4Q is kind of a year over year? Speaker 300:22:02Yes, I would look at it similar to probably where we were I wouldn't look at it maybe where people are at today. We don't give guidance, but it seems like it's on Maybe high side there when you compare it to where we're at, especially when we talk about the impacts that we've had on some of our clean energy projects on the T and D side that Those that we think it's stabilized, those will continue to carry out lower margins for the next quarter or 2 as we finish up those projects. But overall, still a very good strong market. Speaker 600:22:33Okay. And then if I could just squeeze in one more for Kelly. The unbilled receivables balance has kind of been increasing, so the revenues on shared orders that Are under negotiations. So that's increased just under $60,000,000 here and it's been kind of steadily increasing the last several quarters. Can you give any context as to What that's related to and maybe the timeline for resolution and maybe a benefit to cash flow instead of the working capital drag And Abby? Speaker 400:23:09Yes, sure. Happy to talk about that. And maybe just to back up a little bit. So part of this It comes down to just the growth of our company. So of course, as our revenues grow, unbilled revenues will also be likely to grow in some proportion to A couple of other factors, our DSOs have risen a bit from where we were at the end of last year, which was near record lows. Speaker 400:23:34And a couple of things have contributed to that. So one is really project timing. And I talked a little bit about this last quarter, But as we have projects that are wrapping up, we do start to build some balances related to contract retainage. And you can see that in the quarter, We were up another 12% in contract retainage versus the Q2. So that is part of it. Speaker 400:23:58The other is I've talked about some of our Mid to large size transmission and clean energy projects can have some pretty favorable billing profiles if we start those projects And then those balance out as we wrap up. And so that's also a bit of what was a positive for us in the Q4 of last And then in the second and third quarters, has been a bit of a drag as we look at DSOs. I think the good news though is that when you look at our DSOs Relative to our peers, still in a pretty favorable position. And of course, we do recognize though in a higher interest rate environment, our customers Are just naturally likely to want to hang on to their money till the last minute when it's due and may start to push more on payment terms. So we of course keep a close watch on that. Speaker 400:24:44But I think the good news is even with needing to have working capital to support our growing business, We still ended the quarter in a very minimal leverage position. Speaker 600:24:57Okay. Fair enough. Thank you all. I appreciate it. Speaker 300:25:02Thanks, Justin. Operator00:25:05Thank you. Please standby. And our next question comes from Brian Russo from Sidoti. Please go ahead. Speaker 700:25:18Hi, good morning. Good morning, Brian. If we could just focus on solar for a minute. The challenges facing that Industry has been well publicized as of late, mostly due to rising interest rates, higher cost Capital supply chain inflation, headwinds. And I'm just curious what are Hearing from your customers, whether it's on the C and I side or the T and D side, whether it's utilities or Independent power producers or 3rd party developers, what are you seeing in the market? Speaker 700:26:02Because you referenced solar several times Throughout your opening remarks, as negatively impacting margins? Speaker 300:26:12Yes. I think let's divide it into 2 things here. I think when we're talking future work in the market, we still see it as a very strong market going forward, But it's one that we'll continue to be very selective on as we pick up projects because of some of the impacts that you mentioned and we talked about in our script. So we continue to see those impacts and supply chain is an issue out there. I mean materials tighter and tighter in that marketplace There's a lot going on worldwide in that market. Speaker 300:26:41Labor is always a concern and we'll grow steady in that market like we are in other markets and Continue to push that side, but very cautiously. So I would say from a client standpoint, they're bullish on what's going forward. But again, we're going to be very selective going forward. Speaker 700:27:01Okay, great. And then just on the backlog, Not necessarily sequential trends because I know start and stops of projects, it could create Some lumpiness there, but when I look year over year, T and D is still up double digits each quarter This year, but it looks like C and I peaked up 12% in June year over year To the September quarter, which is up less than 2% versus September a year ago. And I just wondering if Give some more insight into that and is that tying to your early comments of Seeing some commercial slowdown as we move into 2024? Speaker 300:27:49I would say our markets are strong in what we're looking at. Again, As we said before, our backlog is always going to be lumpy. We're not trying to sign a contract and get it forced into our backlog for quarter end, so We can report something higher. We want to make sure we have the right contract in place and with higher interest rates and some of the terms and conditions we push for. Sometimes it Takes a little longer to push a contract forward or for them to get their budgets approved. Speaker 300:28:19But from a visibility standpoint, very strong market out there going forward. Speaker 700:28:25Okay. And then lastly, the operating cash flow relative to free cash flow, it looks like You have a free cash flow outflow for the 1st 9 months of the year. And I'm just wondering, I suppose that means we should see quite a meaningful improvement in free cash flow in the 4th quarter To kind of match generally your historical trends? Speaker 400:28:52Sure. I'll address that one, Brian, so part of the negative free cash flow is the higher CapEx this year, which really aligns with the growth We're having particularly on the T and D side of the business as that is the more asset intensive side of the business. So we do expect that to be A way that we'll continue to support our growth is investing in fleet and equipment. So that's one aspect. The other is on operating cash And some of the dynamics I talked about in response to Justin's question, which really comes back to project timing being a big Driver of that, so we do expect there are some retainage balances that will bill and collect starting here in the 4th But some of that will also push into the 1st part of next year. Speaker 400:29:35So we do expect that that will normalize over time, but it is a bit of an ebb Slow tying back to project timing. Speaker 700:29:46Okay, great. And then just lastly, you mentioned Texas And California has big markets on the transmission side. Are you seeing any movements or increased activity With utility transmission projects tied to the D'MISO Tranche 1 projects? Speaker 500:30:08Yes, I'll take that Rick. Yes, we are actually. We've been bidding a few of those projects over the past year And there's 3 of them out right now and we're seeing more in the future. So that activity is picking up. And right now, like I said, we're pretty optimistic about where we stand in Our capabilities in that were aligned pretty well with a lot of those clients who are existing MSA partners. Speaker 500:30:38So that activity is picking up. And I think I've mentioned in the past, Brian, that we're going to see that kind of spread out evenly from 2020 4 through 2029 on the construction side of things. Speaker 700:30:56Okay, great. Thank you very much. Speaker 300:30:58Thanks, Brian. Operator00:31:04Thank you. Please stand Okay. I'm showing no further questions at this time. I would now like to turn the call back to Rick Schwartz, President and Chief Executive Officer of the MYR Group. Please go ahead. Speaker 300:31:40To conclude, on behalf of Kelly, Todd, Don and myself, I sincerely thank you for joining us on the call today. I don't have anything further and we look forward to working with you going forward and speaking with you again on our next conference call. Until then, stay safe. Operator00:31:59Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.Read morePowered by Earnings DocumentsSlide DeckPress Release(8-K)Quarterly report(10-Q) MYR Group Earnings HeadlinesMYR Group, Inc. (NASDAQ:MYRG) Receives $191.83 Consensus Price Target from AnalystsOctober 5, 2025 | americanbankingnews.comMYR Group (MYRG) was downgraded to a Hold Rating at KeyBancOctober 4, 2025 | theglobeandmail.comArizona-made nanochips the new millionaire maker?George Gilder handed President Reagan the first microchip that helped create $6.5 trillion in wealth over the last 40 years. Now he's stepping forward with an even bigger prediction about what's being built in the Arizona desert. He believes 3 little-known companies will explode when a bombshell announcement just days from now. Smart investors are already positioning themselves.October 9 at 2:00 AM | Banyan Hill Publishing (Ad)Is Fair Valuation for MYR Group (MYRG) Shifting Focus to Its Long-Term Growth Story?October 3, 2025 | finance.yahoo.comWhat is KeyCorp's Estimate for MYR Group FY2025 Earnings?October 3, 2025 | americanbankingnews.comQ2 Earnings Highlights: MYR Group (NASDAQ:MYRG) Vs The Rest Of The Construction and Maintenance Services StocksOctober 2, 2025 | msn.comSee More MYR Group Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like MYR Group? Sign up for Earnings360's daily newsletter to receive timely earnings updates on MYR Group and other key companies, straight to your email. Email Address About MYR GroupMYR Group (NASDAQ:MYRG) Inc. (NASDAQ: MYRG) is a specialty electrical contractor that provides a broad array of construction, maintenance and emergency restoration services to utility, commercial, industrial and renewable energy customers. The company was formed in 1995 through the consolidation of several regional specialty contractors and has since expanded its capabilities to support complex transmission and distribution projects, substation installations, communication and wireless infrastructure, as well as renewable power interconnections. Through a network of operating subsidiaries, MYR Group delivers turnkey solutions that include overhead and underground line construction, substation and switchgear installation, substation maintenance and testing, and storm restoration services. The company’s workforce is trained to deploy advanced equipment and adhere to stringent safety and regulatory standards, enabling it to work on projects ranging from urban transmission rebuilds to rural distribution extensions and large-scale solar, wind and battery storage interconnection systems. Headquartered in Henderson, Colorado, MYR Group serves customers across the United States and Canada, with regional offices and field locations that provide local responsiveness and operational flexibility. The company is led by President and Chief Executive Officer Clive H. Lewin, whose tenure has focused on strategic growth through selective acquisitions and investment in technology, workforce development and safety programs. MYR Group continues to pursue opportunities in evolving energy markets while maintaining its emphasis on reliable delivery and long-term customer relationships.View MYR Group ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Tesla Earnings Loom: Bulls Eye $600, Bears Warn of $300Spotify Could Surge Higher—Here’s the Hidden Earnings SignalBerkshire-Backed Lennar Slides After Weak Q3 EarningsWall Street Eyes +30% Upside in Synopsys After Huge Earnings FallRH Stock Slides After Mixed Earnings and Tariff ConcernsCelsius Stock Surges After Blowout Earnings and Pepsi DealWhy DocuSign Could Be a SaaS Value Play After Q2 Earnings Upcoming Earnings Fastenal (10/13/2025)Wells Fargo & Company (10/14/2025)Citigroup (10/14/2025)Johnson & Johnson (10/14/2025)JPMorgan Chase & Co. 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There are 8 speakers on the call. Operator00:00:00Good morning, everyone, and welcome to the MYR Group Third Quarter 2023 Earnings Results Conference Call. At this time, all participants are in listen only mode. After the speakers' presentation, there will be a question and answer session. Today's conference is being recorded. At this time, for opening remarks and introductions, I would like turn the conference over to David Gutierrez, Corporate Services. Operator00:00:38Please go ahead, David. Speaker 100:00:42Thank you, and good morning, everyone. I'd like to welcome you to the MYR Group conference call to discuss the company's 3rd quarter results for 2023, which were reported yesterday. Joining us on today's call are Rick Schwartz, President and Chief Executive Officer Kelly Huntington, Senior Vice President and Chief Financial Officer Todd Cooper, Senior Vice President and Chief Operating sir, of MYR Group's Transmission and Distribution segment and Don Egan, Senior Vice President and Chief Operating Officer of MYR Group's Commercial and Industrial segment. If you did not receive yesterday's press release, please contact Dresner Corporate Services at 312-726 3,600 and we will send you a copy or go to the MYR Group website where a copy is available under the Investor Relations tab. Speaker 200:01:35Also, a Speaker 100:01:35webcast replay of today's call will be available for 7 days on the Investors page of the MYR Group website atmyrgroup.com. Before we begin, I want to remind you that this discussion may contain forward looking statements. Any such statements are based upon information available to MYR Group's management as of this date, and MYR Group It assumes no obligation to update any such forward looking statements. These forward looking statements involve risks and uncertainties that could cause actual results to differ materially from the forward looking statements. Accordingly, these statements are no guarantee of future performance. Speaker 100:02:17These risks and uncertainties are discussed in the company's annual report on Form 10 ks for the year ended December 31, 2022, The company's quarterly report on Form 10 Q for the Q3 of 2023 and in yesterday's press release. Certain non GAAP financial information will be discussed on the call today. A reconciliation of these non GAAP measures to the most Comparable GAAP measures is set forth in yesterday's press release. With that said, let me turn the call over to Rick Schwartz. Speaker 300:02:52Thanks, David. Good morning, everyone. Welcome to our Q3 2023 conference call to discuss financial and operational results. I will begin by providing a summary of the 3rd quarter results and then we'll turn the call over to Kelly Huntington, our Chief Financial Officer, for a more detailed financial review. Following Kelly's overview, Todd Cooper and Don Egan, Chief Operating Officers of our T and D and C and I segments will provide a summary of our segment's performance and discuss some of MYR Group's opportunities going forward. Speaker 300:03:23I will then conclude today's call with some closing remarks and open the call up for your questions. The strength of our long term customer relationships and a strong market position resulted in a steady 3rd quarter performance. Our teams continue to execute projects with operational excellence and expand existing client relationships through master service and alliance agreements across our districts. Bidding activity remains healthy as we are strategically pursue and capture new opportunities that position us for potential future growth. A growing demand for electrification, a continued emphasis on the clean energy sources And a focus on grid modernization and hardening continue to be strong market drivers and could present opportunities for consistent success across our business. Speaker 300:04:13The 2023 North American electric transmission forecast released in September by the C3 Group indicates a strong potential for healthy growth moving forward as electricity demand continues to increase across the country. The report projects $172,000,000,000 of spending on new transmission or upgrades over the next 5 years from the top 20 investor owned utilities. Carbon reduction goals and clean energy targets are other potential spend drivers in the T and D market. We continue to track these major transmission expansion projects and clean energy initiatives that may lead to future work opportunities and growth, while remaining committed to executing existing projects for our valued customers. In our C and I segment, Industrial spend projections are positive in our key markets such as data centers, healthcare, transportation And manufacturing, even as the overall commercial markets are forecasted to slow down into 2024. Speaker 300:05:18By expanding existing relationships with our preferred clients and strategically bidding and expanding work in our chosen markets, We continue to experience a steady backlog of work and could see potential growth moving forward. The commitment And solution orientated mindset of our people allows us to remain at the forefront of the industry And provide our clients with excellent service and customer experience, backed by safe and reliable execution. Our steady Q3 performance is a result of their tireless efforts and I would like to thank them for their fostering our strong culture. Now, Kelly will provide details on our Q3 2023 financial results. Speaker 400:06:02Thank you, Rick, and good morning, everyone. Our Q3 2023 revenue was $939,000,000 a record high, which represents an increase of $140,000,000 or 17% compared to the same period last year. Our 3rd quarter T and D revenues were $549,000,000 a record high for our T and D segment and an increase of 21% compared to the same period last year. The breakdown of T and D revenues was $358,000,000 for transmission and $191,000,000 for distribution, Both record. P and D segment revenues increased due to higher revenue on transmission projects, primarily related to higher revenue on clean energy projects. Speaker 400:06:54Work performed in our master service agreements continue to represent approximately 50% of our T and D revenue. C and I revenues were $391,000,000 a record high for our C and I segment and an increase of 12% compared to the same period last year. C and I revenues increased primarily due to higher revenue related to clean energy projects in certain geographical areas. Our gross margin was 9.8% for the Q3 of 2023 compared to 10.8% for the same period last year. The decrease in gross margin was primarily due to labor and project inefficiencies, some of which were caused by supply chain disruptions and inclement weather. Speaker 400:07:42Gross margin was also negatively impacted by rising costs associated with inflation. These margin decreases were partially offset by favorable change orders and better than anticipated productivity on certain projects. G and D operating income margin was 6.6% for the Q3 of 2023 compared to 7.6% for the same period last year. The decrease was primarily due to labor and project inefficiencies, mainly related to clean energy projects as well as inclement weather. These decreases were partially offset by better than anticipated productivity. Speaker 400:08:24C and I operating margin was 3.6% for the Q3 of 2023 compared to 3.1% for the same period last year. The increase was primarily due to favorable change orders and better than anticipated productivity on certain projects. These increases were partially offset by labor and project inefficiencies, which were caused by supply chain disruptions And inclement weather. C and I operating income margin was also negatively impacted by rising costs associated with inflation. Q3 2023 operating expenses were $60,000,000 an increase of $1,000,000 compared to the same period last year. Speaker 400:09:06The increase was primarily due to higher employee incentive compensation costs and higher employee related expenses to support the growth in our operations. 3rd quarter 2023 interest expense was $1,000,000 an increase of $200,000 compared to the same period last Sure. The increase was primarily due to higher interest rates, partially offset by lower average debt balances during the Q3 of 2023 as compared to the same period last year. 3rd quarter 2023 net income was $22,000,000 compared to $18,000,000 for the same period last year. Net income per diluted share of $1.28 increased 17% compared to $1.09 for the same period last year. Speaker 400:09:573rd quarter 2023 EBITDA was $47,000,000 compared to $40,000,000 for the same period last year. Total backlog as of September 30, 2023 was $2,620,000,000 6 percent higher than a year ago. Total backlog as of September 30, 2023 consisted of $1,140,000,000 for our T and D segment Operator00:10:23and $1,480,000,000 Speaker 400:10:25for our C and I segment. 3rd quarter 2023 operating cash flow was $13,000,000 compared to operating cash flow of $14,000,000 for the same period last year. 3rd quarter 2023 free cash flow was negative $10,000,000 compared to free cash flow of negative $4,000,000 for the same period last year, with the decrease primarily due to higher capital expenditures to support our continued growth. Moving to liquidity and our balance sheet. We had $292,000,000 of working capital, dollars 62,000,000 of funded debt and $432,000,000 in borrowing availability under our credit facility as of September 30, 2023. Speaker 400:11:09We have continued to maintain a strong funded debt to EBITDA leverage ratio of 0.33 times as of September 30, 2023. We believe that our credit facility, strong balance sheet and future cash flow from operations will enable us to meet our working capital needs, support the organic growth of our business, pursue acquisitions and opportunistically repurchase shares. I'll now turn the call over to Todd Cooper, who will provide an overview of our transmission and distribution segments. Speaker 500:11:43Thanks, Kelly, and good morning, everyone. Our T and D segment's steady financial performance in the 3rd quarter Demonstrates the strength of our long term customer relationships and the reliability of our sound business principles. Our districts continue to maintain and expand strong client relationships, while a healthy bid environment and strategic wins throughout our markets That produced a very nice backlog of work. As Rick mentioned, we're seeing significant investments in electrical infrastructure throughout North America, including many transmission upgrades, substation expansions and distribution hardening programs. According to the 2023 North American electric transmission forecast recently released by the C3 Group, The total electric transmission capital spend in 2022 was over $43,000,000,000 It is forecasted to grow as high as $67,000,000,000 in 20.27. Speaker 500:12:45This investment Is expected across the country with Texas and California, 2 focus areas for MYR Group having the highest planned transmission capital expenditures. The report also indicated that significant load growth driven by hyperscale data centers is increasing the need For additional substation infrastructure and transmission interconnections around North America. Overall, the C3 report Stated that investor owned utilities represent roughly 60% of the total U. S. Electric transmission market and it is considered the most stable and predictable of all sectors. Speaker 500:13:24The need for new and upgraded electrical infrastructure has the potential to create future opportunities for our business. Our traditional T and D operations continued their strong execution of work throughout our operating territories. Our Eastern region was awarded Transmission line projects as well as substation expansions and upgrades to the Q3. The subsidiary of the L. E. Speaker 500:13:49Myers Company Extended several master service agreements in multiple districts and continues to bid others. Wally Escudas and Harlan Electric executed 3 year MSA. In our Western region, we continue to expand work with trusted long term clients, including a fast track storm damage transmission line repair project in Texas by Great Southwestern Construction. Rising labor costs and project inefficiencies, Some weather related and most notably in the solar market persisted across the segment. These along with supply chain disruptions impacted financial results for Q3. Speaker 500:14:28While we see rising labor costs stabilizing, our strategic insight survey of clients conducted this year To shed some light on supply chain constraints our clients face, to help mitigate supply chain constraints, our clients are expanding their roster of suppliers And working diligently with them to form better working relationships. MYR Group also continues to work in close collaboration with our robust network of vendors And our customers to help mitigate supply chain challenges and advance projects to successful completion. In summary, our T and D segment remains committed to partnering with our valued customers, safely provide excellent project delivery, While strengthening and expanding those relationships for mutually beneficial outcomes and thank you to our talented employees helping us reach our high quality standards every day. We are excited about the outlook of the T and D industry and look forward to playing a key role in helping to meet the future demand of North America. I will now turn the call over to Don Egan, who will provide an overview of our Commercial and Industrial segment. Speaker 200:15:39Thanks, Todd, and good morning, everyone. The 3rd quarter saw steady performance in the C and I segment As we continue to strengthen and leverage strong relationships with our valued customers, while professionally executing projects And strategically bidding opportunities in our chosen core markets. As Rick mentioned earlier, while overall commercial spending is forecasted for A slight slowdown going into 2024. There are positive signs of growth in our chosen markets such as data centers, Healthcare, Transportation and Manufacturing. The consensus construction forecast from the American Institute of Architecture released in July Projects growth in industrial construction spending into 2024, particularly in public safety with a forecasted 5.3% increase and healthcare at a projected 3% increase. Speaker 200:16:32Data centers remain an active and high demand market due to shifts toward hybrid cloud environments And increasing use of artificial intelligence and forecast predict record growth in the market. According to a report from McKinsey and Company released Earlier this year, demand for data center projects is forecasted to grow by 10% year over year, reaching 35 gigawatts by 2,030, More than doubling current consumption. These encouraging forecasts could generate growth for our business And we continue to leverage our expertise to place us in a leading position to win opportunities in these markets. Our backlog of work remains steady in the C and I segment, thanks to strong long term relationships with clients And our subsidiaries continue to see healthy bidding activity in key markets across North America. Transportation projects remain underway in Colorado and Vancouver, As well as data center build outs and upgrades across our C and I business. Speaker 200:17:33Sturgeon Electric continues to execute pharmaceutical projects in Colorado, while closely monitoring opportunities for additional battery storage, solar and electrical vehicle charging station projects. CSI Electrical Contractors in Hewlett Electric continued to serve clients in the clean energy space, executing both solar and energy storage work, while also seeing solid bidding opportunities for additional work in those markets. Supply chain and material headwinds persist in the C and I segment. Although we have seen some improvements in the second half of twenty twenty three, we continue to work closely with our vendors and clients to mitigate these challenges And best serve them with exceptional project delivery. It is thanks to the tireless effort of our experienced and committed employees That we continue to overcome obstacles, maintain a healthy pipeline of work and remain a trusted and agile partner for our valued customers. Speaker 200:18:31I would like to thank all of our employees for their hard work and placing us in a position to succeed. Thanks everyone for your time today. I will now turn the call back to Rick, who will provide us with some closing comments. Speaker 300:18:45Thank you for those updates, Kelly, Todd and Don. Our Q3 2023 performance illustrates the strength of our core markets, our ability to maintain and expand long term customer relationships And our ongoing commitment to strong operating principles and sound business strategies. We recognize the importance of adapting to market conditions And being an agile partner for our customers as we respond to industry changes. This is supported by our continued investment and development of our teams Who enable us to maintain our status as an industry leader by the work they perform each day. Thank you to every employee for your dedication And invaluable contributions to the organization. Speaker 300:19:28It does not go unnoticed. And finally, I want to thank each of you for your continued support of MYR Group. Operator, we are now ready to open the call up for comments and questions. Operator00:19:49Thank you. At this time, we will conduct a question and answer session. And standby while we compile our Q and A roster. Our first question comes from Justin Hauke of The Beard Company. Please go ahead. Speaker 600:20:19Yes. Hi, good morning, everyone. I guess Good Speaker 300:20:23morning, Justin. Speaker 600:20:24Good morning. My first question here was, You guys called out 130 basis point impact to gross margin from estimate revisions on your fixed price contracts. I guess I was just hoping to get a little bit more detail on that. I mean, was that primarily weather related as kind of a one time thing for the quarter? And then also maybe the split between the segments Speaker 300:20:49and how that fell through. Speaker 600:20:50I would assume it's mostly in T and D. Speaker 300:20:53It was mostly in T and D and it was primarily on our solar side of the business, the clean energy side, where we had some weather impacts on projects. We had some, As Todd said in his script, some rising labor costs that affected us on a few projects and some design issues that we're working through. So that was primarily where it was at. The rest of the T and D performed pretty well as expected. Speaker 600:21:18Okay. And then I guess Maybe a follow-up to that is just looking into 4Q and typically seasonally 3Q Is a higher margin, more profitable quarter, but to your previous point, it sounds like there were some kind of one time things here. But If I look at the estimates that are out there for 4Q, the EBITDA margins are materially higher than 3Q. So I guess, I mean, just the tenor of maybe the margin contribution that you would see out there. I mean, is 3Q kind of usually Light and maybe the better comparison for 4Q is kind of a year over year? Speaker 300:22:02Yes, I would look at it similar to probably where we were I wouldn't look at it maybe where people are at today. We don't give guidance, but it seems like it's on Maybe high side there when you compare it to where we're at, especially when we talk about the impacts that we've had on some of our clean energy projects on the T and D side that Those that we think it's stabilized, those will continue to carry out lower margins for the next quarter or 2 as we finish up those projects. But overall, still a very good strong market. Speaker 600:22:33Okay. And then if I could just squeeze in one more for Kelly. The unbilled receivables balance has kind of been increasing, so the revenues on shared orders that Are under negotiations. So that's increased just under $60,000,000 here and it's been kind of steadily increasing the last several quarters. Can you give any context as to What that's related to and maybe the timeline for resolution and maybe a benefit to cash flow instead of the working capital drag And Abby? Speaker 400:23:09Yes, sure. Happy to talk about that. And maybe just to back up a little bit. So part of this It comes down to just the growth of our company. So of course, as our revenues grow, unbilled revenues will also be likely to grow in some proportion to A couple of other factors, our DSOs have risen a bit from where we were at the end of last year, which was near record lows. Speaker 400:23:34And a couple of things have contributed to that. So one is really project timing. And I talked a little bit about this last quarter, But as we have projects that are wrapping up, we do start to build some balances related to contract retainage. And you can see that in the quarter, We were up another 12% in contract retainage versus the Q2. So that is part of it. Speaker 400:23:58The other is I've talked about some of our Mid to large size transmission and clean energy projects can have some pretty favorable billing profiles if we start those projects And then those balance out as we wrap up. And so that's also a bit of what was a positive for us in the Q4 of last And then in the second and third quarters, has been a bit of a drag as we look at DSOs. I think the good news though is that when you look at our DSOs Relative to our peers, still in a pretty favorable position. And of course, we do recognize though in a higher interest rate environment, our customers Are just naturally likely to want to hang on to their money till the last minute when it's due and may start to push more on payment terms. So we of course keep a close watch on that. Speaker 400:24:44But I think the good news is even with needing to have working capital to support our growing business, We still ended the quarter in a very minimal leverage position. Speaker 600:24:57Okay. Fair enough. Thank you all. I appreciate it. Speaker 300:25:02Thanks, Justin. Operator00:25:05Thank you. Please standby. And our next question comes from Brian Russo from Sidoti. Please go ahead. Speaker 700:25:18Hi, good morning. Good morning, Brian. If we could just focus on solar for a minute. The challenges facing that Industry has been well publicized as of late, mostly due to rising interest rates, higher cost Capital supply chain inflation, headwinds. And I'm just curious what are Hearing from your customers, whether it's on the C and I side or the T and D side, whether it's utilities or Independent power producers or 3rd party developers, what are you seeing in the market? Speaker 700:26:02Because you referenced solar several times Throughout your opening remarks, as negatively impacting margins? Speaker 300:26:12Yes. I think let's divide it into 2 things here. I think when we're talking future work in the market, we still see it as a very strong market going forward, But it's one that we'll continue to be very selective on as we pick up projects because of some of the impacts that you mentioned and we talked about in our script. So we continue to see those impacts and supply chain is an issue out there. I mean materials tighter and tighter in that marketplace There's a lot going on worldwide in that market. Speaker 300:26:41Labor is always a concern and we'll grow steady in that market like we are in other markets and Continue to push that side, but very cautiously. So I would say from a client standpoint, they're bullish on what's going forward. But again, we're going to be very selective going forward. Speaker 700:27:01Okay, great. And then just on the backlog, Not necessarily sequential trends because I know start and stops of projects, it could create Some lumpiness there, but when I look year over year, T and D is still up double digits each quarter This year, but it looks like C and I peaked up 12% in June year over year To the September quarter, which is up less than 2% versus September a year ago. And I just wondering if Give some more insight into that and is that tying to your early comments of Seeing some commercial slowdown as we move into 2024? Speaker 300:27:49I would say our markets are strong in what we're looking at. Again, As we said before, our backlog is always going to be lumpy. We're not trying to sign a contract and get it forced into our backlog for quarter end, so We can report something higher. We want to make sure we have the right contract in place and with higher interest rates and some of the terms and conditions we push for. Sometimes it Takes a little longer to push a contract forward or for them to get their budgets approved. Speaker 300:28:19But from a visibility standpoint, very strong market out there going forward. Speaker 700:28:25Okay. And then lastly, the operating cash flow relative to free cash flow, it looks like You have a free cash flow outflow for the 1st 9 months of the year. And I'm just wondering, I suppose that means we should see quite a meaningful improvement in free cash flow in the 4th quarter To kind of match generally your historical trends? Speaker 400:28:52Sure. I'll address that one, Brian, so part of the negative free cash flow is the higher CapEx this year, which really aligns with the growth We're having particularly on the T and D side of the business as that is the more asset intensive side of the business. So we do expect that to be A way that we'll continue to support our growth is investing in fleet and equipment. So that's one aspect. The other is on operating cash And some of the dynamics I talked about in response to Justin's question, which really comes back to project timing being a big Driver of that, so we do expect there are some retainage balances that will bill and collect starting here in the 4th But some of that will also push into the 1st part of next year. Speaker 400:29:35So we do expect that that will normalize over time, but it is a bit of an ebb Slow tying back to project timing. Speaker 700:29:46Okay, great. And then just lastly, you mentioned Texas And California has big markets on the transmission side. Are you seeing any movements or increased activity With utility transmission projects tied to the D'MISO Tranche 1 projects? Speaker 500:30:08Yes, I'll take that Rick. Yes, we are actually. We've been bidding a few of those projects over the past year And there's 3 of them out right now and we're seeing more in the future. So that activity is picking up. And right now, like I said, we're pretty optimistic about where we stand in Our capabilities in that were aligned pretty well with a lot of those clients who are existing MSA partners. Speaker 500:30:38So that activity is picking up. And I think I've mentioned in the past, Brian, that we're going to see that kind of spread out evenly from 2020 4 through 2029 on the construction side of things. Speaker 700:30:56Okay, great. Thank you very much. Speaker 300:30:58Thanks, Brian. Operator00:31:04Thank you. Please stand Okay. I'm showing no further questions at this time. I would now like to turn the call back to Rick Schwartz, President and Chief Executive Officer of the MYR Group. Please go ahead. Speaker 300:31:40To conclude, on behalf of Kelly, Todd, Don and myself, I sincerely thank you for joining us on the call today. I don't have anything further and we look forward to working with you going forward and speaking with you again on our next conference call. Until then, stay safe. Operator00:31:59Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.Read morePowered by