Stock in the Spotlight: MYR Group Inc. (NASDAQ: MYRG)

ROLLING MEADOWS, Ill, May 13, 2020 – MYR Group Inc. (NASDAQ: MYRG) reported third-quarter 2019 revenues of $583.20M, a boost of $183.70M, or 46.0 percent, contrast to the third quarter of 2018. Specifically, the T&D segment reported revenues of $294.90M for the third quarter of 2019, a boost of $72.40M, or 32.5 percent, from the third quarter of 2018, mainly because of a boost in revenue on small- to medium-sized transmission projects. The C&I segment reported revenues of $288.30M for the third quarter of 2019, a boost of $111.30M, or 62.9 percent, from the third quarter of 2018, mainly because of increases in volume across all project sizes and incremental revenues from the CSI Electrical Contractors, Inc. (“CSI”) acquisition.

Consolidated gross profit increased to $59.20M in the third quarter of 2019, a boost of $13.90M or 30.7 percent, from the third quarter of 2018. The increase in gross profit was because of higher revenues, partially offset by lower margins. Gross margin was 10.2 percent for the third quarter of 2019 contrast to 11.3 percent for the third quarter of 2018. The decrease in gross margin was mainly because of projects that we continue to carry at lower than historical margins, for which we are pursuing additional compensation. In Addition To, gross margin included changes of estimates on certain contracts associated with recent acquisitions which are subject to margin guarantees and represent potential contingent consideration for which an offset was recognized in other expense. These changes in estimates during the third quarter of 2019 and 2018 were $1.10M and $2.30M, respectively. The decrease in gross margin was partially offset by certain projects with changes in estimates because of better-than-anticipated productivity. Changes in estimates of gross profit on certain projects resulted in a gross margin increases of 0.2 percent and decrease of 0.6 percent for the third quarter of 2019 and 2018, respectively. The third quarter of 2018 was also positively influenced by a high volume of small changes in estimates of gross profit, which did not recur in 2019.

Selling, general and administrative expenses (“SG&A”) increased to $41.70M in the third quarter of 2019, contrast to $31.20M for the third quarter of 2018. The period-over-period increase was mainly because of the acquisition of CSI together with higher employee-related expenses to support operations. As a percentage of revenues, SG&A reduced to 7.1 percent for the third quarter of 2019 from 7.8 percent for the third quarter of 2018.

Income tax expense was $3.80M for the third quarter of 2019, with an effective tax rate of 26.4 percent, contrast to tax expense of $2.90M for the third quarter of 2018, with an effective tax rate of 26.6 percent.

For the third quarter of 2019, net income attributable to MYR Group Inc. was $10.40M, or $0.62 per diluted share attributable to MYR Group Inc., contrast to $8.00M, or $0.48 per diluted share, for the same period of 2018. Third-quarter 2019 EBITDA, a non-GAAP financial measure, was $28.20M, contrast to $22.10M in the third quarter of 2018.

First Nine-Month Results:

MYR reported first nine-months 2019 revenues of $1.500B, a boost of $415.30M, or 38.3 percent, contrast to the first nine-months of 2018. Specifically, the T&D segment reported revenues of $823.40M, a boost of $187.60M, or 29.5 percent, from the first nine-months of 2018, mainly because of a boost in revenue on small- to medium-sized transmission projects. The C&I segment reported revenues of $676.70M, a boost of $227.70M, or 50.7 percent from the first nine-months of 2018, mainly because of increases in volume across all project sizes and incremental revenues from the acquisitions of the Huen Companies and CSI.

Consolidated gross profit increased to $145.20M in the first nine-months of 2019, a boost of $25.50M or 21.4 percent, from the first nine-months of 2018. The increase in gross profit was because of higher revenues, partially offset by lower margins. Gross margin was 9.7 percent for the first nine-months of 2019 contrast to 11.0 percent for the first nine-months of 2018. The decrease in gross margin was mainly because of inclement weather on certain projects and material delays associated with a substantially accomplished joint venture project in which we own the majority controlling interest, which were partially offset by net loss attributable to non-controlling interest. The joint venture project is subject to margin guarantees, for which an offset is recognized in other income. Gross margin was also negatively influenced by certain projects with changes in estimates regarding a higher level of costs on items bid at lower margins, inclement weather conditions and labor inefficiencies for which we are in ongoing negotiations to receive reimbursement. These margin decreases were partially offset by better than anticipated productivity on a project and a favorable claim settlement. Changes in estimates of gross profit on certain projects resulted in a gross margin decreases of 0.5 percent and 0.4 percent for the first nine-months of 2019 and 2018, respectively.

SG&A increased to $108.60M in the first nine-months of 2019, contrast to $88.70M for the first nine-months of 2018. The period-over-period increase was mainly because of the acquisitions of the Huen Companies and CSI together with higher employee-related expenses to support operations. As a percentage of revenues, SG&A reduced to 7.2 percent for the first nine-months of 2019 from 8.2 percent for the first nine-months of 2018.

Income tax expense was $8.80M for the first nine-months of 2019, with an effective tax rate of 27.2 percent, contrast to tax expense of $7.90M for the first nine-months of 2018, with an effective tax rate of 28.0 percent. The decrease in the tax rate in the first nine-months of 2019 was mainly because of state income taxes offset by the impact of our non-controlling interest.

For the first nine-months of 2019, net income attributable to MYR Group Inc. was $24.90M, or $1.49 per diluted share attributable to MYR Group Inc., contrast to $20.40M, or $1.23 per diluted share, for the same period of 2018.

Backlog:

As of September 30, 2019, MYR’s backlog was $1.370B, contrast to $1.160B as of June 30, 2019. As of September 30, 2019, T&D backlog was $463.80M, and C&I backlog was $902.30M. Total backlog at September 30, 2019 increased $268.60M, or 24.5 percent, from the $1.100B reported at September 30, 2018.

Balance Sheet:

As of September 30, 2019, MYR had $229.30M of borrowing availability under its revolving credit facility.

Dorothy Mack

I am Dorothy Mack and I give “Liberty Headquarters” an insight into the most recent conservative news. I have been an independent financial adviser for over 11 years in the city and in recent years turned my experience in finance and passion for journalism into a full-time role. I perform analysis of events and legislation and publicize valuable information for the shareholder community. Address: 436 Stone Lane, Pottstown, PA 19464, USA Phone: (+1) 610-327-8521 Email: dorothymack@libertyheadquarters.com

Dorothy Mack

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