MYR Group Inc. Announces Second-Quarter and First-Half 2016 Results
Highlights
- Second quarter revenues of
$261.9 million - Second quarter net income of
$5.5 million , or$0.31 per share - Backlog increase of
$40.2 million , or 9.3 percent from the prior quarter to$475.0 million , our highest level sinceDecember 31, 2012 - Second quarter common stock repurchases of approximately 2.8 million shares for
$67.6 million - On
July 28, 2016 , MYR's Board of Directors approved an additional$20.0 million to the share repurchase program
Management Comments
Second-Quarter Results
MYR reported second-quarter 2016 revenues of
Consolidated gross profit decreased to
Selling, general and administrative expenses increased to
For the second quarter of 2016, net income was
First-Half Results
MYR reported first-half 2016 revenues of
Consolidated gross profit decreased to
Selling, general and administrative expenses increased to
For the first half of 2016, net income was
Share Repurchase Program
In the second quarter MYR purchased 2.8 million shares of its common stock for
Backlog
As of
Balance Sheet
As of
Non-GAAP Financial Measures
To supplement MYR's financial statements presented in accordance with generally accepted accounting principles in
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 second-quarter 2016 results on
About MYR
MYR is a leading specialty contractor serving the electrical infrastructure market throughout
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," "estimate," "expect," "intend," "may," "objective," "outlook," "plan," "project," "likely," "unlikely," "possible," "potential," "should" 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 press 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 for the fiscal year ended
Financial tables follow…
Consolidated Balance Sheets As of | |||||||
(In thousands, except share and per share data) | 2016 | 2015 | |||||
(unaudited) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 3,363 | $ | 39,797 | |||
Accounts receivable, net of allowances of | 161,910 | 187,235 | |||||
Costs and estimated earnings in excess of billings on uncompleted contracts | 67,181 | 51,486 | |||||
Receivable for insurance claims in excess of deductibles | 12,999 | 11,290 | |||||
Refundable income taxes | 1,727 | 5,617 | |||||
Other current assets | 6,778 | 7,942 | |||||
Total current assets | 253,958 | 303,367 | |||||
Property and equipment, net of accumulated
depreciation of | 156,216 | 160,678 | |||||
46,781 | 47,124 | ||||||
Intangible assets, net of accumulated amortization of | 11,205 | 11,362 | |||||
Other assets | 3,515 | 2,394 | |||||
Total assets | $ | 471,675 | $ | 524,925 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Current maturities of long-term debt, including capital leases | $ | 888 | $ | — | |||
Accounts payable | 77,467 | 73,300 | |||||
Billings in excess of costs and estimated earnings on uncompleted contracts | 44,056 | 40,614 | |||||
Accrued self insurance | 37,782 | 36,967 | |||||
Other current liabilities | 26,943 | 28,856 | |||||
Total current liabilities | 187,136 | 179,737 | |||||
Deferred income tax liabilities | 14,325 | 14,382 | |||||
Long-term debt, including capital leases, net of current maturities | 23,665 | — | |||||
Other liabilities | 862 | 926 | |||||
Total liabilities | 225,988 | 195,045 | |||||
Commitments and contingencies | |||||||
Stockholders' equity: | |||||||
Preferred stock—$0.01 par value per share; 4,000,000 authorized shares; | |||||||
none issued and outstanding at | — | — | |||||
Common stock—$0.01 par value per share; 100,000,000 authorized shares; | |||||||
16,201,793 and 19,969,347 shares issued and outstanding at | 160 | 198 | |||||
Additional paid-in capital | 132,431 | 161,342 | |||||
Accumulated other comprehensive income | 32 | 116 | |||||
Retained earnings | 113,064 | 168,224 | |||||
Total stockholders' equity | 245,687 | 329,880 | |||||
Total liabilities and stockholders' equity | $ | 471,675 | $ | 524,925 |
Unaudited Consolidated Statements of Operations and Comprehensive Income (Loss) Three and Six Months Ended | |||||||||||||||
Three months ended | Six months ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
(In thousands, except per share data) | 2016 | 2015 | 2016 | 2015 | |||||||||||
Contract revenues | $ | 261,934 | $ | 276,488 | $ | 515,568 | $ | 520,636 | |||||||
Contract costs | 230,499 | 244,752 | 456,852 | 459,526 | |||||||||||
Gross profit | 31,435 | 31,736 | 58,716 | 61,110 | |||||||||||
Selling, general and administrative expenses | 22,517 | 18,947 | 46,376 | 37,539 | |||||||||||
Amortization of intangible assets | 292 | 84 | 503 | 167 | |||||||||||
Gain on sale of property and equipment | (516 | ) | (319 | ) | (612 | ) | (1,217 | ) | |||||||
Income from operations | 9,142 | 13,024 | 12,449 | 24,621 | |||||||||||
Other income (expense) | |||||||||||||||
Interest income | 1 | 8 | 5 | 15 | |||||||||||
Interest expense | (242 | ) | (187 | ) | (425 | ) | (366 | ) | |||||||
Other, net | (52 | ) | (31 | ) | 56 | (89 | ) | ||||||||
Income before provision for income taxes | 8,849 | 12,814 | 12,085 | 24,181 | |||||||||||
Income tax expense | 3,349 | 4,740 | 4,598 | 8,935 | |||||||||||
Net income | $ | 5,500 | $ | 8,074 | $ | 7,487 | $ | 15,246 | |||||||
Income per common share: | |||||||||||||||
—Basic | $ | 0.32 | $ | 0.39 | $ | 0.41 | $ | 0.73 | |||||||
—Diluted | $ | 0.31 | $ | 0.38 | $ | 0.40 | $ | 0.72 | |||||||
Weighted average number of common shares and potential common shares outstanding: | |||||||||||||||
—Basic | 17,354 | 20,760 | 18,336 | 20,662 | |||||||||||
—Diluted | 17,679 | 21,215 | 18,638 | 21,135 | |||||||||||
Net income | $ | 5,500 | $ | 8,074 | $ | 7,487 | $ | 15,246 | |||||||
Other comprehensive income (loss): | |||||||||||||||
Foreign currency translation adjustment | 32 | (8 | ) | (84 | ) | 19 | |||||||||
Other comprehensive income (loss) | 32 | (8 | ) | (84 | ) | 19 | |||||||||
Total comprehensive income | $ | 5,532 | $ | 8,066 | $ | 7,403 | $ | 15,265 |
Unaudited Consolidated Statements of Cash Flows Six Months Ended | |||||||
Six months ended | |||||||
June 30, | |||||||
(In thousands) | 2016 | 2015 | |||||
Cash flows from operating activities: | |||||||
Net income | $ | 7,487 | $ | 15,246 | |||
Adjustments to reconcile net income to net cash flows provided by operating activities — | |||||||
Depreciation and amortization of property and equipment | 19,187 | 18,152 | |||||
Amortization of intangible assets | 503 | 167 | |||||
Stock-based compensation expense | 2,439 | 2,716 | |||||
Deferred income taxes | (27 | ) | (101 | ) | |||
Gain on sale of property and equipment | (612 | ) | (1,217 | ) | |||
Other non-cash items | 75 | 89 | |||||
Changes in operating assets and liabilities | |||||||
Accounts receivable, net | 25,313 | (7,683 | ) | ||||
Costs and estimated earnings in excess of billings on | |||||||
uncompleted contracts | (15,619 | ) | (30,998 | ) | |||
Receivable for insurance claims in excess of deductibles | (1,709 | ) | 839 | ||||
Other assets | (560 | ) | (3,053 | ) | |||
Accounts payable | 5,160 | 20,688 | |||||
Billings in excess of costs and estimated earnings on | |||||||
uncompleted contracts | 3,462 | (3,481 | ) | ||||
Accrued self insurance | 814 | (2,774 | ) | ||||
Other liabilities | 549 | 439 | |||||
Net cash flows provided by operating activities | 46,462 | 9,029 | |||||
Cash flows from investing activities: | |||||||
Proceeds from sale of property and equipment | 1,843 | 1,326 | |||||
Cash paid for acquired business | — | (11,374 | ) | ||||
Purchases of property and equipment | (12,237 | ) | (29,731 | ) | |||
Net cash flows used in investing activities | (10,394 | ) | (39,779 | ) | |||
Cash flows from financing activities: | |||||||
Net borrowings under revolving lines of credit | 20,000 | — | |||||
Payment of principal obligations under capital leases | (144 | ) | — | ||||
Proceeds from exercise of stock options | 1,116 | 1,519 | |||||
Debt issuance costs | (874 | ) | — | ||||
Excess tax benefit from stock-based awards | 237 | 1,620 | |||||
Repurchase of common shares | (92,958 | ) | (3,169 | ) | |||
Other financing activities | 63 | 28 | |||||
Net cash flows used in financing activities | (72,560 | ) | (2 | ) | |||
Effect of exchange rate changes on cash | 58 | — | |||||
Net decrease in cash and cash equivalents | (36,434 | ) | (30,752 | ) | |||
Cash and cash equivalents: | |||||||
Beginning of period | 39,797 | 77,636 | |||||
End of period | $ | 3,363 | $ | 46,884 | |||
Supplemental cash flow information: | |||||||
Noncash investing activities: | |||||||
Acquisition of property and equipment acquired under capital lease arrangements | $ | 4,697 | $ | — | |||
Noncash financing activities: | |||||||
Share repurchases not settled | $ | 3,037 | $ | — | |||
Capital lease obligations initiated | 4,697 | — |
Unaudited Consolidated Selected Data and Net Income Per Share Three and Twelve Months Ended | ||||||||||||||||||||||||||
Three months ended | Last twelve months ended | |||||||||||||||||||||||||
June 30, | June 30, | |||||||||||||||||||||||||
(in thousands, except shares and per share data) | 2016 | 2015 | 2016 | 2015 | ||||||||||||||||||||||
Summary Statement of Operations Data: | ||||||||||||||||||||||||||
Contract revenues | $ | 261,934 | $ | 276,488 | $ | 1,056,613 | $ | 1,020,088 | ||||||||||||||||||
Gross profit | $ | 31,435 | $ | 31,736 | $ | 119,947 | $ | 135,916 | ||||||||||||||||||
Income from operations | $ | 9,142 | $ | 13,024 | $ | 32,669 | $ | 60,498 | ||||||||||||||||||
Income before provision for income taxes | $ | 8,849 | $ | 12,814 | $ | 32,203 | $ | 59,764 | ||||||||||||||||||
Income Tax Expense | $ | 3,349 | $ | 4,740 | $ | 12,660 | $ | 21,987 | ||||||||||||||||||
Net income | $ | 5,500 | $ | 8,074 | $ | 19,543 | $ | 37,777 | ||||||||||||||||||
Effective Tax Rate | 37.8 | % | 37.0 | % | 39.3 | % | 36.8 | % | ||||||||||||||||||
Per Share Data: | ||||||||||||||||||||||||||
Income per common share: | ||||||||||||||||||||||||||
- Basic | $ | 0.32 | $ | 0.39 | $ | 1.01 | (1 | ) | $ | 1.82 | (1 | ) | ||||||||||||||
- Diluted | $ | 0.31 | $ | 0.38 | $ | 0.99 | (1 | ) | $ | 1.78 | (1 | ) | ||||||||||||||
Weighted average number of common shares | ||||||||||||||||||||||||||
and potential common shares outstanding : | ||||||||||||||||||||||||||
- Basic | 17,354 | 20,760 | 19,417 | (2 | ) | 20,720 | (2 | ) | ||||||||||||||||||
- Diluted | 17,679 | 21,215 | 19,778 | (2 | ) | 21,235 | (2 | ) | ||||||||||||||||||
June 30, | December 31, | June 30, | June 30, | |||||||||||||||||||||||
(in thousands) | 2016 | 2015 | 2015 | 2014 | ||||||||||||||||||||||
Summary Balance Sheet Data: | ||||||||||||||||||||||||||
Total assets | $ | 471,675 | $ | 524,925 | $ | 562,431 | $ | 533,460 | ||||||||||||||||||
Total stockholders' equity (book value) | $ | 245,687 | $ | 329,880 | $ | 340,496 | $ | 311,114 | ||||||||||||||||||
$ | 57,986 | $ | 58,486 | $ | 58,616 | $ | 56,631 | |||||||||||||||||||
Total debt | $ | 24,553 | $ | — | $ | — | $ | — | ||||||||||||||||||
Last twelve months ended | ||||||||||||||||||||||||||
June 30, | ||||||||||||||||||||||||||
2016 | 2015 | |||||||||||||||||||||||||
Financial Performance Measures (3): | ||||||||||||||||||||||||||
Reconciliation of Non-GAAP measures: | ||||||||||||||||||||||||||
Net income | $ | 19,543 | $ | 37,777 | ||||||||||||||||||||||
Interest expense, net | 785 | 645 | ||||||||||||||||||||||||
Tax impact of interest | (309 | ) | (237 | ) | ||||||||||||||||||||||
EBIT, net of taxes (4) | $ | 20,019 | $ | 38,185 | ||||||||||||||||||||||
See notes at the end of this earnings release. |
Unaudited Performance Measures and Reconciliation of Non-GAAP Measures Three and Twelve Months Ended | |||||||||||||||||||||
Three months ended | Last twelve months ended | ||||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||||
(in thousands, except shares, per share data, ratios and percentages) | 2016 | 2015 | 2016 | 2015 | |||||||||||||||||
Financial Performance Measures (3): | |||||||||||||||||||||
EBITDA (5) | $ | 18,864 | $ | 22,348 | $ | 72,388 | $ | 95,881 | |||||||||||||
EBITDA per Diluted Share (6) | $ | 1.07 | $ | 1.05 | $ | 3.66 | $ | 4.52 | |||||||||||||
Free Cash Flow (7) | $ | 23,568 | $ | (5,710 | ) | $ | 51,328 | $ | 16,166 | ||||||||||||
Book Value per Period End Share (8) | $ | 14.87 | $ | 15.84 | |||||||||||||||||
Tangible Book Value (9) | $ | 187,701 | $ | 281,880 | |||||||||||||||||
Tangible Book Value per Period End Share (10) | $ | 11.36 | $ | 13.11 | |||||||||||||||||
Debt to Equity Ratio (11) | 0.1 | 0.0 | |||||||||||||||||||
Asset Turnover (12) | 1.88 | 1.91 | |||||||||||||||||||
Return on Assets (13) | 3.5 | % | 7.1 | % | |||||||||||||||||
Return on Equity (14) | 5.7 | % | 12.1 | % | |||||||||||||||||
Return on | 6.8 | % | 14.9 | % | |||||||||||||||||
Reconciliation of Non-GAAP measures: | |||||||||||||||||||||
Reconciliation of Net Income to EBITDA: | |||||||||||||||||||||
Net income | $ | 5,500 | $ | 8,074 | $ | 19,543 | $ | 37,777 | |||||||||||||
Interest expense, net | 241 | 179 | 785 | 645 | |||||||||||||||||
Provision for income taxes | 3,349 | 4,740 | 12,660 | 21,987 | |||||||||||||||||
Depreciation and amortization | 9,774 | 9,355 | 39,400 | 35,472 | |||||||||||||||||
EBITDA (5) | $ | 18,864 | $ | 22,348 | $ | 72,388 | $ | 95,881 | |||||||||||||
Reconciliation of Net Income per diluted share | |||||||||||||||||||||
to EBITDA per diluted share: | |||||||||||||||||||||
Net Income per share: | $ | 0.31 | $ | 0.38 | $ | 0.99 | $ | 1.78 | |||||||||||||
Interest expense, net, per share | 0.01 | 0.01 | 0.04 | 0.03 | |||||||||||||||||
Provision for income taxes per share | 0.19 | 0.22 | 0.64 | 1.04 | |||||||||||||||||
Depreciation and amortization per share | 0.56 | 0.44 | 1.99 | 1.67 | |||||||||||||||||
EBITDA per diluted share (6) | $ | 1.07 | $ | 1.05 | $ | 3.66 | $ | 4.52 | |||||||||||||
Calculation of Free Cash Flow: | |||||||||||||||||||||
Net cash flow from operating activities | $ | 32,036 | $ | 7,659 | $ | 80,433 | $ | 59,708 | |||||||||||||
Less: cash used in purchasing property and equipment | (8,468 | ) | (13,369 | ) | (29,105 | ) | (43,542 | ) | |||||||||||||
Free Cash Flow (7) | $ | 23,568 | $ | (5,710 | ) | $ | 51,328 | $ | 16,166 | ||||||||||||
Reconciliation of Book Value to Tangible Book Value: | |||||||||||||||||||||
Book value (total stockholders' equity) | $ | 245,687 | $ | 340,496 | |||||||||||||||||
(57,986 | ) | (58,616 | ) | ||||||||||||||||||
Tangible Book Value (9) | $ | 187,701 | $ | 281,880 | |||||||||||||||||
Reconciliation of Book Value per period end share | |||||||||||||||||||||
to Tangible Book Value per period end share: | |||||||||||||||||||||
Book value per period end share: | $ | 14.87 | $ | 15.84 | |||||||||||||||||
(3.51 | ) | (2.73 | ) | ||||||||||||||||||
Tangible Book Value per period end share (10) | $ | 11.36 | $ | 13.11 | |||||||||||||||||
Calculation of Period End Shares: | |||||||||||||||||||||
Shares Outstanding | 16,202 | 21,038 | |||||||||||||||||||
Plus: Common Equivalents | 325 | 455 | |||||||||||||||||||
Period End Shares (15) | 16,527 | 21,493 | |||||||||||||||||||
June 30, | June 30, | June 30, | |||||||||||||||||||
2016 | 2015 | 2014 | |||||||||||||||||||
Reconciliation of | |||||||||||||||||||||
Book value (total stockholders' equity) | $ | 245,687 | $ | 340,496 | $ | 311,114 | |||||||||||||||
Plus: Total Debt | 24,553 | — | — | ||||||||||||||||||
Less: Cash and cash equivalents | (3,363 | ) | (46,884 | ) | (54,552 | ) | |||||||||||||||
$ | 266,877 | $ | 293,612 | $ | 256,562 | ||||||||||||||||
See notes at the end of this earnings release. |
(1) Last-twelve-months earnings per share is the sum of earnings per share reported in the last four quarters. |
(2) Last-twelve-months average basic and diluted shares were determined by adding the average shares reported for the last four quarters and dividing by four. |
(3) These financial performance measures are provided as supplemental information to the financial statements. These measures are used by management to evaluate our past performance and prospects for future performance, to evaluating 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. |
(4) EBIT, net of taxes is defined as net income plus net interest, less the tax impact of net interest. The tax impact of net interest is computed by multiplying net interest by the effective tax rate. Management uses EBIT, net of taxes, to measure our results exclusive of the impact of financing costs. |
(5) 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. EBITDA is a component of the debt to EBITDA covenant, as defined in our credit agreement, which we must report to our bank on a quarterly basis. In addition, management considers EBITDA a useful measure because it eliminates differences which are caused by different capital structures as well as different tax rates and depreciation schedules when comparing our measures to our peers' measures. |
(6) EBITDA per 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. |
(7) 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. |
(8) Book value per period end share is calculated by dividing total stockholders' equity at the end of the period by the period end shares outstanding. |
(9) Tangible book value is calculated by subtracting goodwill and intangible assets outstanding at the end of the period from stockholders' equity outstanding 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 stockholders' equity. |
(10) 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. |
(11) The debt to equity ratio is calculated by dividing total debt at the end of the period by total stockholders' equity at the end of the period. |
(12) Asset turnover is calculated by dividing the current period revenue by total assets at the beginning of the period. |
(13) Return on assets is calculated by dividing net income for the period by total assets at the beginning of the period. |
(14) Return on equity is calculated by dividing net income for the period by total stockholders' equity at the beginning of the period. |
(15) Period end shares is calculated by adding average common stock equivalents for the quarter to period end balance of common stock 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) Invested capital is calculated by adding net debt (total debt less cash and marketable securities) to total stockholders' equity. |
(17) Return on invested capital is calculated by dividing EBIT, net of taxes, less any dividends, by invested capital at the beginning of the period. Return on invested capital is not recognized under GAAP, and is a key metric used by management to determine our executive compensation. |
Source:MYR Group Inc. Contact:Betty R. Johnson , Chief Financial Officer, 847-290-1891, investorinfo@myrgroup.com Investor Contact:Kristine Walczak Dresner Corporate Services , 312-780-7240, kwalczak@dresnerco.com
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