MYRG - MYR Group Inc. Announces Fourth-Quarter and Full Year 2023 Results

THORNTON, Colo., Feb. 28, 2024 (GLOBE NEWSWIRE) -- 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 Canada, announced today its fourth-quarter and full year 2023 financial results.

Fourth Quarter 2023 Highlights

• Record quarterly revenues of $1.00 billion
• Strong quarterly net income of $24.0 million, or $1.43 per diluted share
• Record quarterly EBITDA of $52.8 million
  

Full Year 2023 Highlights

• Record full-year revenues of $3.64 billion
• Record full-year net income of $91.0 million, or $5.40 per diluted share
• Record full-year EBITDA of $188.2 million
• Strong backlog of $2.51 billion

Management Comments
Rick Swartz, MYR’s President and CEO, said, “We finished 2023 with solid financial performance in the fourth quarter, and annual revenues of $3.64 billion, setting a record high for the ninth consecutive year. Fourth quarter 2023 net income was $24.0 million, a 2.2 percent decrease over the fourth quarter of 2022, with revenues, consolidated gross profit and EBITDA increasing compared to the same period of 2022. A steady backlog of $2.51 billion reflects a healthy bidding environment and the continued investment in infrastructure to meet growing electrification demands across the U.S. and Canada.” Mr. Swartz continued, “The dedication and talent of our team members contributed to our growing success in 2023. Market indicators remain positive, and by leveraging proven business strategies and remaining committed to providing customers with quality, safe, and dependable results, we believe we are well-positioned for continued growth in 2024.”

Fourth Quarter Results
MYR reported fourth-quarter 2023 revenues of $1.00 billion, an increase of $140.2 million, or 16.2 percent, compared to the fourth quarter of 2022. Specifically, our T&D segment reported record quarterly revenues of $591.5 million, an increase of $77.8 million, or 15.2 percent, from the fourth quarter of 2022, due to an increase in revenue on transmission projects, primarily related to an increase in revenue on clean energy projects as well as an increase in revenues on distribution projects. Our C&I segment also reported record quarterly revenues of $412.7 million, an increase of $62.4 million, or 17.8 percent, from the fourth quarter of 2022, primarily due to higher revenue related to clean energy projects in certain geographical areas.

Consolidated gross profit increased to $97.5 million for the fourth quarter of 2023, compared to $96.3 million for the fourth quarter of 2022. Gross margin decreased to 9.7 percent for the fourth quarter of 2023 from 11.1 percent for the fourth quarter of 2022. 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 experienced on certain projects. Gross margin was also negatively impacted by rising costs associated with inflation and unfavorable job closeouts. These margin decreases were partially offset by better-than-anticipated productivity and favorable weather on a project. Changes in estimates of gross profit on certain projects resulted in a gross margin decrease of 2.2 percent for the fourth quarter of 2023 and were not significant for the fourth quarter of 2022.

Selling, general and administrative expenses (“SG&A”) increased to $60.0 million for the fourth quarter of 2023, compared to $58.0 million for the fourth quarter of 2022. The period-over-period increase was primarily due to an increase in employee-related expenses to support the growth in our operations and an increase in contingent compensation expense related to a prior acquisition, partially offset by a decrease in employee incentive compensation costs.

Amortization of intangible assets decreased to $1.2 million for the fourth quarter of 2023, compared to $2.2 million for the fourth quarter of 2022. The period-over-period decrease was primarily due to the one-year amortization of backlog acquired with the Powerline Plus Companies in 2022.

Interest expense increased to $1.9 million for the fourth quarter of 2023, compared to $1.3 million for the fourth quarter of 2022. The period-over-period increase was primarily attributable to higher interest rates and outstanding debt during the fourth quarter of 2023 as compared to the fourth quarter of 2022.

Income tax expense was $11.5 million for the fourth quarter of 2023, with an effective tax rate of 32.3 percent, compared to income tax expense of $11.2 million for the fourth quarter of 2022, which represented 31.3 percent of pretax income. The increase in the effective tax rate for the fourth quarter of 2023 compared to the fourth quarter of 2022 was primarily due to higher other permanent difference items.

For the fourth quarter of 2023, net income was $24.0 million, or $1.43 per diluted share, compared to $24.6 million, or $1.46 per diluted share, for the same period of 2022. Fourth-quarter 2023 EBITDA, a non-GAAP financial measure, was $52.8 million, compared to $52.0 million in the fourth quarter of 2022.

Full Year Results
MYR reported record revenues of $3.64 billion for the full year of 2023, an increase of $635.4 million, or 21.1 percent, compared to $3.01 billion for the full year of 2022. Specifically, the T&D segment reported revenues of $2.09 billion, an increase of $343.4 million, or 19.7 percent, from the full year of 2022, related to an increase in revenue on transmission projects, primarily related to an increase in revenue on clean energy projects, and an increase in revenue on distribution projects. The C&I segment reported revenues of $1.55 billion, an increase of $291.9 million, or 23.1 percent, from the full year of 2022, primarily due to higher revenue related to clean energy projects in certain geographical areas.

Consolidated gross profit was $364.4 million for the full year of 2023, compared to $344.0 million for the full year of 2022. The increase in gross profit was due to higher revenues, partially offset by lower margins. Gross margin decreased to 10.0 percent for the full year of 2023 from 11.4 percent for the full year of 2022. The decrease in gross margin was primarily due to labor and project inefficiencies, some of which were caused by rising costs associated with supply chain disruptions, inflation and inclement weather experienced on certain projects. Gross margin was also negatively impacted by an increase in cost associated with an adjustment to sales tax accruals for prior periods in one of our operating areas. These margin decreases were partially offset by favorable change orders, better-than-anticipated productivity and favorable weather on a project. Changes in estimates of gross profit on certain projects resulted in a gross margin decreases of 1.7 percent and 0.4 percent for the full year of 2023 and 2022, respectively.

SG&A increased to $234.6 million for the full year of 2023, compared to $222.4 million for the full year of 2022. The year-over-year increase was primarily due to an increase in employee-related expenses to support the growth in our operations and an increase in contingent compensation expense related to a prior acquisition.

Amortization of intangible assets decreased to $4.9 million for the full year of 2023, compared to $9.0 million for the full year of 2022. The year-over-year decrease was primarily due to intangible amortization associated with the one-year amortization of backlog acquired with the Powerline Plus Companies in 2022.

Interest expense increased to $4.9 million for the full year of 2023, compared to $3.6 million for the full year of 2022. The year-over-year increase was primarily attributable to higher interest rates partially offset by lower average debt balances during the full year of 2023 as compared to the full year of 2022.

Income tax expense was $34.0 million for the full year of 2023, with an effective tax rate of 27.2 percent, compared to income tax expense of $30.8 million for the full year of 2022, with an effective tax rate of 27.0 percent. The increase in the tax rate for the year ended December 31, 2023 was primarily due to higher other permanent difference items, partially offset by a higher favorable impact from stock compensation excess tax benefits.

For the full year of 2023, net income was $91.0 million, or $5.40 per diluted share, compared to $83.4 million, or $4.91 per diluted share, for the same period of 2022. Full-year 2023 EBITDA, a non-GAAP financial measure, was a record $188.2 million, compared to $175.8 million for the full year of 2022.

Backlog
As of December 31, 2023, MYR's backlog was $2.51 billion, compared to $2.62 billion as of September 30, 2023. As of December 31, 2023, T&D backlog was $959.6 million and C&I backlog was $1.55 billion. Total backlog at December 31, 2023 increased $10.6 million, or 0.4 percent, from the $2.50 billion reported at December 31, 2022.

Balance Sheet
As of December 31, 2023, MYR had $442.4 million of borrowing availability under our $490 million revolving credit facility.

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 fourth-quarter and full year 2023 results on Thursday, February 29, 2024 at 8:00 a.m. Mountain time. To participate via telephone and join the call live, please register in advance here: https://register.vevent.com/register/BI2cabb3d2e38b4e0d8a2efe632b6ada9d. Upon registration, telephone participants will receive a confirmation email detailing how to join the conference call, including the dial-in number and a unique passcode. Participants may access the audio-only webcast of the conference call from the Investors page of MYR Group’s website at myrgroup.com. A replay of the webcast will be available for seven days.

About MYR
MYR Group is a holding company of leading, specialty electrical contractors providing services throughout the United States and Canada through two business segments: Transmission & Distribution (T&D) and Commercial & Industrial (C&I). MYR Group subsidiaries have the experience and expertise to complete electrical installations of any type and size. Through their T&D segment they provide services on electric transmission, distribution networks, substation facilities, clean energy projects and electric vehicle charging infrastructure. Their comprehensive T&D services include design, engineering, procurement, construction, upgrade, maintenance and repair services. T&D customers include investor-owned utilities, cooperatives, private developers, government-funded utilities, independent power producers, independent transmission companies, industrial facility owners and other contractors. Through their C&I segment, they provide a broad range of services which include the design, installation, maintenance and repair of commercial and industrial wiring generally for airports, hospitals, data centers, hotels, stadiums, commercial and industrial facilities, clean energy projects, manufacturing plants, processing facilities, water/waste-water treatment facilities, mining facilities, intelligent transportation systems, roadway lighting, signalization and electric vehicle charging infrastructure. C&I customers include general contractors, commercial and industrial facility owners, government agencies and developers. 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, 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:
Kelly M. Huntington, Chief Financial Officer, 847-290-1891, investorinfo@myrgroup.com

Investor Contact:
David Gutierrez, Dresner Corporate Services, 312-780-7204, dgutierrez@dresnerco.com

Financial tables follow…

See notes at the end of this earnings release

See notes at the end of this earnings release.

See notes at the end of this earnings release.

(1) Funded debt includes borrowings under our revolving credit facility and the outstanding balances of our outstanding equipment notes.
(2) 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.
(3) 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. Certain material covenants contained within our credit agreement are based on EBITDA with certain additional adjustments, including our interest coverage ratio and leverage ratio, 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 provides MYR Group Inc. and its investors with an additional tool to compare MYR Group Inc. operating performance on a consistent basis by removing the impact of certain items that management believes to not directly reflect the company’s core operations. Management further believes that EBITDA is useful to investors and other external users of MYR Group Inc. financial statements in evaluating the company’s operating performance and cash flow because EBITDA is widely used by investors to measure a company’s operating performance without regard to items such as interest expense, taxes, depreciation and amortization, which can vary substantially from company to company depending upon accounting methods and book value of assets, useful lives placed on assets, capital structure and the method by which assets were acquired.
(4) 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.
(5) EBIA, net of taxes is defined as net income plus net interest plus amortization of intangible assets, less the tax impact of net interest and amortization of intangible assets. The tax impact of net interest and amortization of intangible assets is computed by multiplying net interest and amortization of intangible assets by the effective tax rate. Management uses EBIA, net of taxes, to measure our results exclusive of the impact of financing and amortization of intangible assets costs.
(6) 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.
(7) Book value per period end share is calculated by dividing total shareholders’ equity at the end of the period by the period end shares outstanding.
(8) Tangible book value is calculated by subtracting goodwill and intangible assets at the end of the period from shareholders’ equity 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 shareholders’ equity.
(9) 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.
(10) The funded debt to equity ratio is calculated by dividing total funded debt at the end of the period by total shareholders’ equity at the end of the period.
(11) Asset turnover is calculated by dividing the current period revenue by total assets at the beginning of the period.
(12) Return on assets is calculated by dividing net income for the period by total assets at the beginning of the period.
(13) Return on equity is calculated by dividing net income for the period by total shareholders’ equity at the beginning of the period.
(14) Return on invested capital is calculated by dividing EBIA, net of taxes, less any dividends, by average invested capital. Return on invested capital is not recognized under GAAP, and is a key metric used by management to determine our executive compensation.
(15) Period end shares is calculated by adding average common stock equivalents for the quarter to the period end balance of common shares 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) Average invested capital is calculated by adding net funded debt (total funded debt less cash and marketable securities) to total shareholders’ equity and calculating the average of the beginning and ending of each period.