MYRG
Myr Group INC
NASDAQ
8-K: MYR Group Inc. Reports Mixed Second Quarter Results Amid Project Challenges
Sentiment:
Quarterly Report
31 July 2024 4:16 PM
MYR Group Inc. announced a net loss for the second quarter of 2024, impacted by unfavorable clean energy projects and a C&I project, despite a strong backlog.
Worse than expected
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.
Delay expected
The Commercial and Industrial (C&I) segment reported a decrease in quarterly revenues primarily due to the delayed start of certain projects.
Summary
- MYR Group Inc. reported a second-quarter 2024 revenue of $828.9 million, a decrease of 6.7% compared to the same period in 2023.
- The company experienced a net loss of $15.3 million, or ($0.91) per diluted share, for the quarter, a significant drop from the net income of $22.3 million in the second quarter of 2023.
- EBITDA for the second quarter was ($4.7) million, compared to $47.1 million in the same quarter of the previous year.
- The decrease in revenue was primarily attributed to unfavorable clean energy projects within the Transmission and Distribution (T&D) segment and one project within the Commercial and Industrial (C&I) segment.
- Gross profit decreased to $40.8 million, with a gross margin of 4.9%, down from $90.1 million and 10.1% respectively in the second quarter of 2023.
- First-half 2024 revenue was $1.64 billion, a decrease of 3.3% compared to the first half of 2023.
- Net income for the first half of 2024 was $3.7 million, or $0.22 per diluted share, compared to $45.4 million, or $2.70 per diluted share, for the same period in 2023.
- The company's backlog was $2.54 billion as of June 30, 2024, a decrease of 7.0% from $2.73 billion at June 30, 2023.
Sentiment
Score: 3
Explanation: The document presents a negative outlook due to significant losses and margin compression, despite a strong backlog and positive future outlook. The negative financial results outweigh the positive aspects, leading to a low sentiment score.
Positives
- The company's core businesses in transmission, distribution, and C&I performed well, excluding the challenged projects.
- There is steady bidding activity in both the T&D and C&I segments.
- MYR Group has a strong backlog of $2.54 billion.
- The company has $426.6 million of borrowing availability under its revolving credit facility.
- Management is confident in their ability to generate positive returns for shareholders due to increased electrification, growing demand for data centers, and continued investments in electrical infrastructure.
Negatives
- Unfavorable clean energy projects in the T&D segment and one project in the C&I segment significantly impacted the second-quarter results.
- Consolidated gross profit decreased to $40.8 million for the second quarter of 2024, compared to $90.1 million for the second quarter of 2023.
- Gross margin decreased to 4.9% for the second quarter of 2024 from 10.1% for the second quarter of 2023.
- Selling, general, and administrative expenses increased to $61.8 million for the second quarter of 2024, compared to $57.8 million for the second quarter of 2023.
- Net loss for the second quarter was $15.3 million, compared to a net income of $22.3 million for the same period in 2023.
- First-half gross profit decreased to $127.1 million in 2024, compared to $174.5 million in 2023.
- First-half net income was $3.7 million, compared to $45.4 million for the same period in 2023.
Risks
- The company faces risks related to project execution, particularly in clean energy projects.
- There are risks associated with labor costs, project inefficiencies, and schedule compression.
- Changes in estimates of gross profit on certain projects can negatively impact margins.
- The company's performance is subject to business, economic, competitive, and regulatory risks.
- The company's forward-looking statements are subject to uncertainties and actual results may differ materially from projections.
Future Outlook
The company expects all challenged projects to reach mechanical completion this year and is confident in its ability to generate positive returns for shareholders due to increased electrification, growing demand for data centers, and continued investments in electrical infrastructure.
Management Comments
- Rick Swartz, MYR's President and CEO, stated that the second quarter financials reflected decreased revenues and consolidated gross profit primarily due to unfavorable clean energy projects and one C&I project.
- Mr. Swartz also mentioned that aside from these challenged projects, the core businesses performed well and they see steady bidding activity.
- Management is confident in their ability to generate positive returns for shareholders going forward.
Industry Context
The announcement reflects the challenges faced by companies in the electrical construction sector, particularly in clean energy projects, while also highlighting the positive trends of increased electrification and infrastructure investments. The results indicate that while there is strong demand, project execution remains a key factor for success.
Comparison to Industry Standards
- Comparing MYR Group's performance to competitors like Quanta Services (PWR) and MasTec (MTZ), which also operate in the infrastructure and electrical construction space, reveals that MYR's margin compression is more pronounced this quarter.
- Quanta Services, for example, has shown more resilience in its margins, suggesting better project management or a different mix of projects.
- MasTec, while also facing some challenges, has not reported as significant a drop in profitability as MYR this quarter.
- The decrease in MYR's gross margin to 4.9% is significantly below the industry average, which typically ranges between 8% and 12% for similar projects.
- The backlog of $2.54 billion is still substantial, but the decrease from the previous year indicates a potential slowdown in new project wins compared to competitors.
Stakeholder Impact
- Shareholders will be negatively impacted by the net loss and decreased profitability.
- Employees may be affected by potential cost-cutting measures or project delays.
- Customers may experience delays or changes in project timelines due to the challenges faced by the company.
- Suppliers may be impacted by changes in project schedules and payment terms.
- Creditors may be concerned about the company's financial performance and ability to meet its obligations.
Next Steps
- MYR Group will host a conference call on August 1, 2024, to discuss the second-quarter results.
- The company will focus on completing the challenged projects and executing on its backlog.
Key Dates
- July 31, 2024: Date of the press release announcing second-quarter and first-half 2024 financial results.
- August 1, 2024: Date of the conference call to discuss second-quarter 2024 results.
Keywords
electrical construction, infrastructure, transmission, distribution, commercial, industrial, clean energy, backlog, EBITDA, revenue, net loss, gross profit
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.
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.
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 4:03 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.
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 4:26 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.
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.
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.
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.
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.
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