MYRG
Myr Group INC
NASDAQ
10-Q: MYR Group Inc. Reports Mixed Q2 Results Amidst Project Estimate Adjustments
Sentiment:
Quarterly Report
31 July 2024 4:26 PM
MYR Group Inc. experienced a decrease in revenue and a net loss in the second quarter of 2024, primarily due to significant changes in project cost estimates.
Worse than expected
The company's net income was significantly lower than expected due to significant changes in project cost estimates.
The company's gross margin was significantly lower than expected due to significant changes in project cost estimates.
The company's revenue was lower than expected due to a decrease in revenue on transmission projects, a decrease in C&I revenue, and a decrease in revenue on distribution projects.
Delay expected
The company's financial results are expected to continue to be affected by delays and cost volatility through 2024 due to supply chain disruptions, inflationary pressures, tariffs and regulatory slowdowns.
The company experienced a decrease in C&I revenue due to the delayed start of certain projects.
Summary
- MYR Group Inc. reported a net loss of $15.3 million for the three months ended June 30, 2024, a significant downturn compared to the net income of $22.3 million in the same period of 2023.
- The company's revenue decreased by 6.7% to $828.9 million in Q2 2024, down from $888.6 million in Q2 2023.
- Gross margin also declined to 4.9% in Q2 2024 from 10.1% in Q2 2023, primarily due to unfavorable changes in project cost estimates.
- For the six months ended June 30, 2024, the company's net income was $3.7 million, a sharp decrease from $45.4 million in the same period of 2023.
- The company's backlog was $2.54 billion as of June 30, 2024, compared to $2.51 billion at December 31, 2023 and $2.73 billion at June 30, 2023.
- The company repurchased 117,422 shares of its common stock under a repurchase program at a weighted-average price of $138.47 per share during the six months ended June 30, 2024.
- The company had $58.7 million of remaining availability to repurchase shares under its share repurchase program as of June 30, 2024.
Sentiment
Score: 3
Explanation: The document presents a negative outlook due to significant decreases in revenue, gross margin, and net income. While the backlog remains relatively stable, the company faces challenges with project cost estimates and market volatility. The sentiment is further dampened by the mention of delays and cost volatility through 2024.
Positives
- The company's backlog increased slightly to $2.54 billion as of June 30, 2024, compared to $2.51 billion at December 31, 2023.
- The company continues to manage its increasing operating costs, including increasing insurance, equipment, labor and material costs.
- The company has an expansion option to increase the commitments under its credit facility by up to an additional $200 million.
Negatives
- The company reported a net loss of $15.3 million for the three months ended June 30, 2024.
- The company's revenue decreased by 6.7% to $828.9 million in Q2 2024.
- Gross margin decreased to 4.9% in Q2 2024, down from 10.1% in Q2 2023.
- The company's net income for the six months ended June 30, 2024, was $3.7 million, a significant decrease from $45.4 million in the same period of 2023.
- Changes in estimates pertaining to certain projects decreased consolidated gross margin by 7.2% during the three months ended June 30, 2024.
Risks
- The company's financial results are expected to continue to be affected by delays and cost volatility through 2024 due to supply chain disruptions, inflationary pressures, tariffs and regulatory slowdowns.
- The timing of multi-year transmission project awards and substantial construction activity is difficult to predict due to regulatory requirements and the permitting needed to commence construction.
- The company may see impacts due to continued market disruptions and overall market volatility which could result in slower growth of its C&I segment.
Future Outlook
The company expects its financial results to continue to be affected by delays and cost volatility through 2024 due to supply chain disruptions, inflationary pressures, tariffs and regulatory slowdowns. The company believes legislative actions aimed at supporting infrastructure improvements in the United States may positively impact long-term demand.
Management Comments
- We believe there is an ongoing need for utilities to sustain investment in their transmission systems to improve reliability, reduce congestion, connect to new clean energy sources and support future load growth.
- We believe there is a need for further investment by utilities on their distribution systems to properly maintain or meet reliability requirements.
- We continue to implement strategies that are designed to further expand our capabilities and effectively allocate capital.
Industry Context
The company operates in the electrical construction services industry, serving both the electric utility infrastructure and commercial and industrial construction markets. The company believes legislative actions aimed at supporting infrastructure improvements in the United States may positively impact long-term demand, particularly in connection with electric power infrastructure, transportation and clean energy spending.
Comparison to Industry Standards
- The company's gross margin of 4.9% in Q2 2024 is significantly lower than the industry average for electrical contractors, which typically ranges from 8% to 15%.
- The company's net loss in Q2 2024 contrasts with the generally positive earnings reported by many of its competitors in the same period.
- The company's backlog of $2.54 billion is comparable to other large electrical contractors, but the company's ability to convert this backlog into revenue and profit is currently under pressure.
- Compared to companies like Quanta Services and MasTec, which also operate in the infrastructure services sector, MYR Group's Q2 results show a greater impact from project estimate adjustments.
Stakeholder Impact
- Shareholders will be negatively impacted by the decrease in net income and gross margin.
- Employees may be affected by potential cost-cutting measures.
- Customers may experience delays or changes in project timelines due to supply chain disruptions and regulatory slowdowns.
- Suppliers may be affected by changes in the company's purchasing patterns.
Next Steps
- The company will continue to manage its increasing operating costs, including increasing insurance, equipment, labor and material costs.
- The company will continue to invest in developing key management and craft personnel in both its T&D and C&I segments and in procuring the specific specialty equipment and tooling needed to win and execute projects of all sizes and complexity.
Related Party Transactions
- Certain subsidiaries of the Company have operating leases for facilities from third party companies that are owned, in whole or part, by employees of the subsidiaries. The terms and rental rates of these leases are at or below market rental rates.
Key Dates
- May 31, 2023: The company entered into a five-year third amended and restated credit agreement.
- May 21, 2024: Amendment No. 1 to the Third Amended and Restated Credit Agreement.
- May 6, 2024: The company announced that its Board of Directors had authorized a new $75.0 million share repurchase program.
- May 9, 2024: The new $75.0 million share repurchase program became effective.
- July 26, 2024: There were 16,507,773 outstanding shares of the registrants $0.01 par value common stock.
Keywords
electrical construction, transmission, distribution, commercial, industrial, infrastructure, revenue, net income, gross margin, backlog, EBITDA, share repurchase, project estimates
MYRG
Myr Group INC
NASDAQ
Sector: Industrials
Filings with Classifications
Better than expected
30 April 2025 8:05 PM
Quarterly Report
- The company's net income increased from $18.9 million to $23.3 million year over year.
- The company's gross margin increased from 10.6% to 11.6% year over year.
- The company's EBITDA increased from $39.8 million to $50.2 million year over year.
Better than expected
30 April 2025 4:02 PM
Earnings Release
- The company's revenue, net income, and EBITDA all increased compared to the same period in the previous year, indicating improved financial performance.
Worse than expected
10 March 2025 4:04 PM
Investor Presentation
- Net income, EBITDA, earnings per share, and free cash flow decreased in 2024 compared to 2023.
Worse than expected
5 March 2025 4:29 PM
Proxy Statement
- The company's revenues decreased by 7.7% in 2024 compared to 2023.
- The company's net income decreased significantly in 2024, dropping from $91.0 million in 2023 to $30.3 million.
Worse than expected
26 February 2025 4:08 PM
Annual Results
- The company's revenue decreased by 7.7% to $3.36 billion in 2024 from $3.64 billion in 2023.
- The company's net income decreased significantly to $30.3 million in 2024 from $91.0 million in 2023.
- The company's gross margin decreased to 8.6% in 2024 compared to 10.0% for the year ended December 31, 2023.
Delay expected
26 February 2025 4:08 PM
Annual Results
- The decrease in C&I revenue was primarily due to the delayed start of certain projects in 2024.
Delay expected
26 February 2025 4:03 PM
Earnings Release
- The C&I segment experienced a decrease in revenue due to the delayed start of certain projects in 2024.
Worse than expected
26 February 2025 4:03 PM
Earnings Release
- The company's revenue and net income decreased for both the fourth quarter and the full year compared to the previous year.
Better than expected
6 November 2024 4:04 PM
Investor Presentation
- The company's third quarter performance showed improvement over the second quarter, demonstrating strong project execution in core areas of the business.
Delay expected
30 October 2024 4:06 PM
Quarterly Report
- The company's financial results are being affected by delays due to supply chain disruptions and regulatory slowdowns.
- Schedule extensions caused by owner-furnished panel delays led to increased costs on two clean energy projects.
Worse than expected
30 October 2024 4:06 PM
Quarterly Report
- The company's gross margin and net income were significantly lower than the same period last year due to unfavorable project estimate adjustments.
- The Transmission and Distribution segment experienced a significant decrease in operating income.
- The company's effective tax rate increased due to higher permanent difference items.
Worse than expected
30 October 2024 4:03 PM
Quarterly Report
- The company's third-quarter revenue and net income were lower than the same period last year.
- The company's gross margin decreased compared to the same period last year.
- The company's earnings per share were lower than the same period last year.
Worse than expected
21 August 2024 4:29 PM
Investor Presentation
- The company reported a net loss of $15.3 million in Q2 2024, which is worse than expected due to project timing issues.
Delay expected
31 July 2024 4:26 PM
Quarterly Report
- The company's financial results are expected to continue to be affected by delays and cost volatility through 2024 due to supply chain disruptions, inflationary pressures, tariffs and regulatory slowdowns.
- The company experienced a decrease in C&I revenue due to the delayed start of certain projects.
Worse than expected
31 July 2024 4:26 PM
Quarterly Report
- The company's net income was significantly lower than expected due to significant changes in project cost estimates.
- The company's gross margin was significantly lower than expected due to significant changes in project cost estimates.
- The company's revenue was lower than expected due to a decrease in revenue on transmission projects, a decrease in C&I revenue, and a decrease in revenue on distribution projects.
Delay expected
31 July 2024 4:16 PM
Quarterly Report
- The Commercial and Industrial (C&I) segment reported a decrease in quarterly revenues primarily due to the delayed start of certain projects.
Worse than expected
31 July 2024 4:16 PM
Quarterly Report
- The company reported a net loss of $15.3 million for the second quarter, a significant downturn compared to the net income of $22.3 million in the same period last year.
- EBITDA for the second quarter was ($4.7) million, a substantial decrease from $47.1 million in the second quarter of 2023.
- Gross margin decreased to 4.9% in the second quarter of 2024, down from 10.1% in the second quarter of 2023.
Better than expected
8 May 2024 4:02 PM
Investor Presentation
- The company achieved record revenue and EPS in 2023, exceeding previous results.
- The company's LTM revenue as of March 31, 2024, reached a record high of $3.65 billion.
- The company has a strong backlog of $2.43 billion, indicating future growth potential.
Delay expected
1 May 2024 4:25 PM
Quarterly Report
- The company expects financial results to be affected by delays due to supply chain disruptions and regulatory slowdowns.
- The C&I segment experienced a revenue decrease due to the delayed start of certain projects.
Worse than expected
1 May 2024 4:25 PM
Quarterly Report
- Net income decreased compared to the same quarter last year.
- Project estimate changes negatively impacted gross margin and operating income.
- Backlog decreased from the previous quarter.
Worse than expected
1 May 2024 4:08 PM
Quarterly Report
- Net income decreased from $23.2 million to $18.9 million year-over-year.
- EBITDA decreased from $41.3 million to $39.8 million year-over-year.
- Backlog decreased from $2.67 billion to $2.43 billion year-over-year.
Delay expected
1 May 2024 4:08 PM
Quarterly Report
- The Commercial and Industrial segment experienced a revenue decrease due to the delayed start of certain projects.
Better than expected
5 March 2024 4:06 PM
Investor Presentation
- The company achieved record revenue, net income, earnings per share, and EBITDA for the full year 2023, indicating better than expected results.
- The company's backlog of $2.51 billion demonstrates strong future demand, exceeding expectations.
Worse than expected
28 February 2024 4:16 PM
Annual Results
- The company's gross margin decreased to 10.0% in 2023 from 11.4% in 2022, primarily due to significant changes in estimated gross profit on certain projects.
Disclaimer: This summary was generated by artificial intelligence and its accuracy is not guaranteed. The information provided here is for general informational purposes only and does not constitute financial advice, recommendation, or endorsement of any kind. It may contain errors or omissions. You should not rely on this information to make financial decisions. Always seek the advice of a qualified financial professional before making any investment or financial decisions. Use of this information is at your own risk.