ROLLING MEADOWS, Ill., Aug. 10, 2009 (GLOBE NEWSWIRE) -- MYR Group Inc. ("MYR") (Nasdaq:MYRG), a leading specialty contractor serving the electrical infrastructure market in the United States, issued second-quarter and first-half 2009 financial results.
Highlights
* Q2 2009 revenues increased 10.7 percent over Q2 2008 revenues to $162.9 million. * Q2 2009 diluted earnings per share (EPS) of $0.21 compared to $0.22 for Q2 2008. * First-half 2009 diluted EPS of $0.35 compared to $0.45 for the same period of 2008. * Q2 2009 EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization), a non-GAAP financial measure, increased to $10.6 million compared to EBITDA of $10.5 million in Q2 2008. * Q2 2009 operating cash flow increased $17.2 million over Q2 2008. * Q2 2009 backlog increased 31.7 percent over Q2 2008 to $316.6 million.
Management Comments
Bill Koertner, MYR's president and CEO said, "Our customers continue to be under pressure to defer capital and maintenance projects in the near term due to the sluggish economy. There are fewer "shovel-ready" projects with financing in place, which means more competition and pressure on margins for the work that is available. However, we are beginning to see some signs that lead us to believe that the economy is turning; credit markets are opening up and the federal stimulus package is starting to produce some positive effects. A number of large transmission projects are moving forward with permitting which should begin benefiting large T&D contractors like MYR in 2010. We are well positioned with some of the very best employees in the industry who know how to bid and execute these larger projects. We also have one of the largest fleets of specialized transmission equipment in the industry and are strategically investing in more equipment and tooling to be ready when the wave of transmission work hits. We believe that our strong financial position is critical to funding equipment purchases as well as assuring our customers we have the resources to successfully execute major work."
Second-Quarter Results
MYR reported second quarter 2009 revenues of $162.9 million, an increase of $15.8 million, or 10.7 percent, compared with the second quarter of 2008. The majority of the increase in revenues was the result of increased activity on a few large transmission projects in the Transmission and Distribution (T&D) segment, which was partially offset by the reduction of revenues from smaller distribution projects, as well as a reduction in revenues in the Commercial and Industrial (C&I) segment. The T&D segment reported revenues of $124.9 million, an increase of 17.8 percent over the same period of 2008, while the C&I segment reported revenues of $38.0 million, a decrease of 7.7 percent over the second quarter of 2008. The decrease in the C&I segment reported revenues was largely due to the current economic environment which has caused a reduction in spending and an increase in bidding competition.
Consolidated gross profit decreased to $18.8 million, or 11.5 percent of revenues, in the second quarter of 2009, compared to $20.0 million or 13.6 percent of revenues for the second quarter of 2008. The decrease in gross profit in the 2009 second quarter compared to the same period of 2008 was primarily attributed to strong performance and increased margins on a few large contracts that resulted in approximately $2.1 million in incremental gross profit during the second quarter of 2008. MYR also experienced an increase in the estimated cost to complete certain T&D contracts that resulted in a reduction to gross margins of approximately $1.3 million during the second quarter of 2009.
For the second quarter of 2009, net income was $4.3 million, or $0.21 per diluted share, compared to net income of $4.6 million, or $0.22 per diluted share for the same period of 2008. Second quarter 2009 EBITDA was $10.6 million, or 6.5 percent of revenues, compared to EBITDA of $10.5 million, or 7.2 percent of revenues, in the second quarter of 2008. The decreases in net income and EBITDA, as a percentage of revenues, were due to a decrease in the gross profit margins discussed above, which was partially offset by a $0.9 million reduction in selling, general and administrative expenses (SG&A) in the second quarter of 2009 over the second quarter of 2008.
First-Half Results
MYR reported first-half 2009 revenues of $295.9 million, an increase of $11.9 million, or 4.2 percent, compared with the first half of 2008. The majority of the increase in revenues was the result of increased activity on a few large transmission projects in the T&D segment, which was partially offset by the reduction of revenues from smaller distribution projects, as well as a reduction in revenues in the C&I segment.
The T&D Segment reported revenues of $224.6 million in the first half of 2009, an increase of 9.8 percent over the same period of 2008. The C&I segment reported revenues of $71.3 million in the first half of 2009, a decrease of 10.2 percent over the same period of 2008. The decrease in the C&I segment reported revenues was largely due to the current economic environment which has caused a reduction in spending and an increase in bidding competition.
Consolidated gross profit decreased 10.8 percent, from $40.2 million in the first half of 2008 to $35.8 million in the first half of 2009. The decrease in gross profit in the first half of 2009 compared to the first half of 2008 was primarily attributed to strong performance and increased margins on a few large contracts that resulted in approximately $4.2 million in incremental gross profit during the first half of 2008. MYR also experienced an increase in the estimated cost to complete certain T&D contracts that resulted in a reduction to gross margins of approximately $2.3 million during the first half of 2009.
For the first half of 2009, net income was $7.2 million, or $0.35 per diluted share, compared to net income of $9.4 million, or $0.45 per diluted share, for the same period of 2008. EBITDA in the first half of 2009 was $18.9 million, or 6.4 percent of revenues, compared to $21.5 million, or 7.6 percent of revenues, for the same period of 2008. The decrease in net income and EBITDA, as a percentage of revenues, was due to a decrease in the gross profit margins, as discussed above, which was partially offset by a $0.8 million reduction in SG&A expenses in the first half of 2009 compared to the same period of 2008.
Backlog
As of June 30, 2009, MYR's backlog was approximately $316.6 million, consisting of $232.1 million in the T&D segment and $84.5 million in the C&I segment. Total backlog increased $76.1 million, or 31.7 percent from $240.5 million reported at June 30, 2008. T&D backlog increased $77.1 million, or 49.8 percent, while C&I backlog decreased $1.0 million, or 1.2 percent, compared to June 30, 2008 backlog. Total backlog at June 30, 2009 increased 0.2 percent from $316.0 million reported at December 31, 2008.
MYR's method of tracking and reporting backlog may differ from methods used by other companies. The timing of contract awards and the duration of large projects can significantly affect MYR's backlog, and therefore, should not be viewed or relied upon as a stand-alone indicator of future results.
Balance Sheet
As of June 30, 2009, MYR had cash and cash equivalents of $44.0 million and total long-term debt of $30.0 million under a term loan. MYR also had a $75 million revolving credit facility, which had one $15.0 million letter of credit outstanding against the total credit available at June 30, 2009. MYR's long-term credit agreement, which encompasses the term loan and the revolving credit facility, expires on August 31, 2012.
Non-GAAP Financial Measures
In an effort to better assist investors in understanding our financial results, we have provided in this release EBITDA, which is a measure not defined under generally accepted accounting principles in the United States (GAAP). Management believes this information is useful to investors in understanding results of operations because it illustrates the impact that interest, taxes, depreciation and amortization had on results. A reconciliation of this financial measure to its GAAP counterpart (net income) is provided at the end of this release.
Conference Call
MYR will host its second-quarter 2009 earnings conference call on Tuesday August 11, 2009 at 10 a.m. Central time. To participate in the conference call via telephone, please dial (888) 523-1228 (domestic) or (719) 325-2334 (international) at least five minutes prior to the start of the event. A replay of the conference call will be available through Tuesday August 18, 2009, at 11:55 p.m. Eastern time, by dialing (888) 203-1112 or (719) 457-0820, and entering conference code: 8576043. 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 Web site at www.myrgroup.com. Please access the Web site at least 15 minutes prior to the start of the call to register and to download and install any necessary audio software. The webcast will be archived on the Company's Web site for seven days.
About MYR Group Inc.
MYR is a holding company of specialty construction service providers. Through subsidiaries dating back to 1891, MYR is one of the largest national contractors serving the transmission and distribution sector of the United States electric utility industry. Transmission and Distribution customers include electric utilities, cooperatives and municipalities. MYR also provides Commercial and Industrial electrical contracting services to facility owners and general contractors in the Western United States. Our comprehensive services include turnkey construction and maintenance services for the nation's electrical infrastructure.
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 and investments. Our forward-looking statements are generally accompanied by words such as "estimate," "project," "predict," "believe," "expect," "anticipate," "potential," "plan," "goal" 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. These and other important factors, including those discussed under ''Risk Factors'' in our Annual Report on Form 10-K, and in other current or periodic reports which we file with the Securities and Exchange Commission, may cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements.
These risks, contingencies and uncertainties include, but are not limited to, significant variations in our operating results from quarter to quarter, the competitive and cyclical nature of our industry, our ability to realize and profit from our backlog, the implementation of the Energy Policy Act of 2005, the implementation of the American Recovery and Reinvestment Act, our ability to obtain new contracts and/or replace completed or cancelled contracts, our ability to obtain adequate bonding for our projects, our ability to hire and retain key personnel and subcontractors, limitations on our internal infrastructure, the downturn in the U.S. economy and credit markets and its impact on our customers and our sources of liquidity.
MYR GROUP INC.
Consolidated Balance Sheets
As of December 31, 2008 and June 30, 2009
December 31, June 30,
(in thousands, except share and per 2008 2009
share data) ------------ ------------
ASSETS (unaudited)
Current assets:
Cash and cash equivalents $ 42,076 $ 44,015
Accounts receivable, net of allowances of
$1,845 and $1,678, respectively 94,048 87,154
Costs and estimated earnings in excess of
billings on uncompleted contracts 25,821 27,980
Deferred income tax assets 10,621 10,621
Receivable for insurance claims in excess
of deductibles 8,968 8,902
Refundable income taxes 145 230
Other current assets 3,731 2,880
------------ ------------
Total current assets 185,410 181,782
Property and equipment, net of accumulated
depreciation of $21,158 and $27,204,
respectively 75,873 80,314
Goodwill 46,599 46,599
Intangible assets, net of accumulated
amortization of $1,218 and $1,385,
respectively 11,874 11,707
Other assets 2,307 1,931
------------ ------------
Total assets $ 322,063 $ 322,333
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 30,187 $ 34,480
Billings in excess of costs and estimated
earnings on uncompleted contracts 32,698 25,351
Accrued self insurance 32,881 33,667
Other current liabilities 27,571 22,300
------------ ------------
Total current liabilities 123,337 115,798
Long-term debt, net of current maturities 30,000 30,000
Deferred income tax liabilities 12,429 12,429
Other liabilities 938 953
------------ ------------
Total liabilities 166,704 159,180
------------ ------------
Commitments and contingencies
Stockholders' equity:
Preferred stock--$0.01 par value per share;
4,000,000 authorized shares; none issued
and outstanding at December 31, 2008 and
June 30, 2009 -- --
Common stock--$0.01 par value per share;
100,000,000 authorized shares;
19,712,811 and 19,748,191 shares issued
and outstanding at December 31, 2008 and
June 30, 2009, respectively 197 197
Additional paid-in capital 141,159 141,755
Retained earnings 14,003 21,201
------------ ------------
Total stockholders' equity 155,359 163,153
------------ ------------
Total liabilities and stockholders'
equity $ 322,063 $ 322,333
============ ============
MYR GROUP INC.
Unaudited Consolidated Statements of Operations
Three and Six Months Ended June 30, 2008 and 2009
Three months ended Six months ended
June 30, June 30,
(in thousands, ------------------------- -------------------------
except share and 2008 2009 2008 2009
per share data) ------------ ------------ ------------ ------------
Contract revenues $ 147,170 $ 162,923 $ 283,933 $ 295,858
Contract costs 127,202 144,146 243,765 260,048
------------ ------------ ------------ ------------
Gross profit 19,968 18,777 40,168 35,810
Selling, general
and administra-
tive expenses 12,236 11,361 24,154 23,335
Amortization of
intangible assets 84 83 167 167
Gain on sale of
property and
equipment (337) (153) (485) (210)
------------ ------------ ------------ ------------
Income from
operations 7,985 7,486 16,332 12,518
Other income
(expense)
Interest income 239 52 659 174
Interest expense (374) (219) (916) (441)
Other, net (50) (51) (107) (111)
------------ ------------ ------------ ------------
Income before
provision for
income taxes 7,800 7,268 15,968 12,140
Income tax expense 3,198 2,953 6,547 4,942
------------ ------------ ------------ ------------
Net income $ 4,602 $ 4,315 $ 9,421 $ 7,198
============ ============ ============ ============
Income per common
share:
--Basic $ 0.23 $ 0.22 $ 0.48 $ 0.37
--Diluted $ 0.22 $ 0.21 $ 0.45 $ 0.35
Weighted average
number of common
shares and
potential common
shares outstand-
ing:
--Basic 19,712,811 19,727,048 19,712,811 19,719,969
--Diluted 20,713,241 20,689,524 20,721,074 20,702,087
MYR GROUP INC.
Unaudited Consolidated Statements of Cash Flows
Three and Six Months Ended June 30, 2008 and 2009
Three months ended Six months ended
June 30, June 30,
------------------------- -------------------------
(in thousands) 2008 2009 2008 2009
------------ ------------ ------------ ------------
Cash flows from
operating
activities:
Net income $ 4,602 $ 4,315 $ 9,421 $ 7,198
Adjustments to
reconcile net
income to net
cash flows
provided by
(used in)
operating
activities --
Depreciation 2,512 3,131 5,129 6,296
Amortization
of intangible
assets 84 83 167 167
Stock-based
compensation
expense 229 231 459 462
Gain on sale
of property
and equipment (337) (153) (485) (210)
Other non-cash
items 21 21 42 42
Changes in
operating
assets and
liabilities
Accounts
receivable,
net (12,703) (1,322) 8,211 6,894
Costs and
estimated
earnings in
excess of
billings on
uncompleted
contracts (241) (4,220) 2,192 (2,159)
Construction
materials
inventory (583) -- (1,023) --
Receivable for
insurance
claims in
excess of
deductibles 66 24 343 66
Other assets 1,248 1,049 3,957 1,100
Accounts
payable 4,270 13,953 (6,892) 8,560
Billings in
excess of
costs and
estimated
earnings on
uncompleted
contracts (674) 23 (3,370) (7,347)
Accrued self
insurance 29 1,261 526 786
Other
liabilities 1,473 (1,230) (7,552) (5,277)
------------ ------------ ------------ ------------
Net cash
flows
provided
by (used
in)
operating
activities (4) 17,166 11,125 16,578
------------ ------------ ------------ ------------
Cash flows from
investing
activities:
Proceeds from
sale of
property and
equipment 343 162 1,504 287
Purchases of
property and
equipment (6,236) (7,515) (17,182) (15,036)
------------ ------------ ------------ ------------
Net cash
flows used
in
investing
activities (5,893) (7,353) (15,678) (14,749)
------------ ------------ ------------ ------------
Cash flows from
financing
activities:
Payments of
capital lease
obligations -- (5) -- (13)
Employee stock
option
transactions -- 134 -- 134
Equity financing
costs (225) (1) (1,978) (11)
Payment on note
payable to
FirstEnergy (2,298) -- (2,298) --
Notes receivable
from purchase
of common stock -- -- 2 --
------------ ------------ ------------ ------------
Net cash
flows
provided
by (used
in)
financing
activities (2,523) 128 (4,274) 110
------------ ------------ ------------ ------------
Net increase
(decrease) in
cash and cash
equivalents (8,420) 9,941 (8,827) 1,939
Cash and cash
equivalents:
Beginning of
period 34,140 34,074 34,547 42,076
------------ ------------ ------------ ------------
End of period $ 25,720 $ 44,015 $ 25,720 $ 44,015
============ ============ ============ ============
MYR GROUP INC.
Unaudited Consolidated Selected Data, Net Income Per Share
And EBITDA Reconciliation
Three and Six Months Ended June 30, 2008 and 2009
Three months ended Six months ended
June 30, June 30,
(in thousands, ------------------------- -------------------------
except share and 2008 2009 2008 2009
per share data) ------------ ------------ ------------ ------------
Summary Data:
Contract revenues $ 147,170 $ 162,923 $ 283,933 $ 295,858
============ ============ ============ ============
Gross profit $ 19,968 $ 18,777 $ 40,168 $ 35,810
============ ============ ============ ============
Income from
operations $ 7,985 $ 7,486 $ 16,332 $ 12,518
============ ============ ============ ============
Net income $ 4,602 $ 4,315 $ 9,421 $ 7,198
============ ============ ============ ============
Income per common
share (1):
- Basic $ 0.23 $ 0.22 $ 0.48 $ 0.37
- Diluted $ 0.22 $ 0.21 $ 0.45 $ 0.35
Weighted average
number of common
shares and
potential common
shares
outstanding (1):
- Basic 19,712,811 19,727,048 19,712,811 19,719,969
- Diluted 20,713,241 20,689,524 20,721,074 20,702,087
Reconciliation of
Net Income to
EBITDA:
Net income $ 4,602 $ 4,315 $ 9,421 $ 7,198
Interest expense
(income), net 135 167 257 267
Provision for
income taxes 3,198 2,953 6,547 4,942
Depreciation and
amortization 2,596 3,214 5,296 6,463
------------ ------------ ------------ ------------
EBITDA (2) $ 10,531 $ 10,649 $ 21,521 $ 18,870
============ ============ ============ ============
(1) The Company calculates net income per common share in accordance
with SFAS No. 128, Earnings per Share. Basic earnings per share is
calculated by dividing net income by the weighted average number of
shares outstanding for the reporting period. Diluted earnings per
share is computed similarly, except that it reflects the potential
dilutive impact that would occur if dilutive securities were
exercised into common shares. Potential common shares are not
included in the denominator of the diluted earnings per share
calculation when inclusion of such shares would be anti-dilutive or
included performance conditions that were not met.
(2) EBITDA is not defined 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.