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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from            to
Commission file number: 1-08325
_____________________________________________________________
MYR GROUP INC.
(Exact name of registrant as specified in its charter)
Delaware36-3158643
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer Identification No.)
12150 East 112th Avenue
Henderson,CO80640
(Address of principal executive offices)(Zip Code)
(303) 286-8000
(Registrant’s telephone number, including area code)

N/A
(Former name, former address and former fiscal year, if changed since last report)
_____________________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par valueMYRGThe Nasdaq Stock Market, LLC
(Nasdaq Global Market)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ¨
Accelerated filer
x
Non-accelerated filer ¨
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No x
As of April 23, 2021, there were 16,827,499 outstanding shares of the registrant’s $0.01 par value common stock.



Table of Contents

INDEX
Page
Throughout this report, references to “MYR Group,” the “Company,” “we,” “us” and “our” refer to MYR Group Inc. and its consolidated subsidiaries, except as otherwise indicated or as the context otherwise requires.
1

Table of Contents
PART 1 - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS
MYR GROUP INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)March 31,
2021
December 31,
2020
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents$73,069 $22,668 
Accounts receivable, net of allowances of $1,665 and $1,696, respectively
373,524 385,938 
Contract assets, net of allowances of $350 and $359, respectively
192,883 185,803 
Current portion of receivable for insurance claims in excess of deductibles11,342 11,859 
Refundable income taxes 1,534 
Other current assets14,548 28,882 
Total current assets665,366 636,684 
Property and equipment, net of accumulated depreciation of $302,134 and $294,366, respectively
181,096 185,114 
Operating lease right-of-use assets21,724 22,291 
Goodwill66,067 66,065 
Intangible assets, net of accumulated amortization of $15,045 and $14,467, respectively
50,793 51,365 
Receivable for insurance claims in excess of deductibles26,758 27,043 
Investment in joint ventures3,644 3,040 
Other assets3,798 4,257 
Total assets$1,019,246 $995,859 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt$4,381 $4,381 
Current portion of operating lease obligations6,986 6,612 
Current portion of finance lease obligations53 318 
Accounts payable192,241 162,580 
Contract liabilities140,314 158,396 
Current portion of accrued self-insurance24,447 24,395 
Other current liabilities79,402 86,718 
Total current liabilities447,824 443,400 
Deferred income tax liabilities18,295 18,339 
Long-term debt25,039 25,039 
Accrued self-insurance45,095 45,428 
Operating lease obligations, net of current maturities14,787 15,730 
Other liabilities19,742 18,631 
Total liabilities570,782 566,567 
Commitments and contingencies
Stockholders’ equity:
Preferred stock—$0.01 par value per share; 4,000,000 authorized shares; none issued and outstanding at March 31, 2021 and December 31, 2020
  
Common stock—$0.01 par value per share; 100,000,000 authorized shares; 16,817,256 and 16,734,239 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively
168 167 
Additional paid-in capital157,995 158,618 
Accumulated other comprehensive income276 23 
Retained earnings290,021 270,480 
Total stockholders’ equity attributable to MYR Group Inc.448,460 429,288 
Noncontrolling interest4 4 
Total stockholders’ equity448,464 429,292 
Total liabilities and stockholders’ equity$1,019,246 $995,859 
The accompanying notes are an integral part of these consolidated financial statements.
2

Table of Contents
MYR GROUP INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
Three months ended
March 31,
(in thousands, except per share data)20212020
Contract revenues$592,486 $518,470 
Contract costs515,533 456,838 
Gross profit76,953 61,632 
Selling, general and administrative expenses49,647 45,046 
Amortization of intangible assets578 1,228 
Gain on sale of property and equipment(683)(1,050)
Income from operations27,411 16,408 
Other income (expense):
Interest income13 2 
Interest expense(475)(1,513)
Other income (expense), net41 (895)
Income before provision for income taxes26,990 14,002 
Income tax expense7,062 4,070 
Net income$19,928 $9,932 
Income per common share:
—Basic$1.19 $0.60 
—Diluted$1.17 $0.59 
Weighted average number of common shares and potential common shares outstanding:
—Basic16,760 16,627 
—Diluted17,045 16,742 
Net income$19,928 $9,932 
Other comprehensive income:
Foreign currency translation adjustment253 87 
Other comprehensive income:253 87 
Total comprehensive income$20,181 $10,019 
The accompanying notes are an integral part of these consolidated financial statements.
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MYR GROUP INC.
UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

PreferredCommon StockAdditional
Paid-In
Accumulated
Other
Comprehensive
RetainedMYR
Group Inc.
Stockholders’
Noncontrolling
(in thousands)StockSharesAmountCapitalIncome (Loss)EarningsEquityInterestTotal
Balance at December 31, 2019 16,649 $166 $152,532 $(446)$212,219 $364,471 $4 $364,475 
Net income— — — — — 9,932 9,932 — 9,932 
Adjustment to adopt ASC 326— — — — — (268)(268)— (268)
Stock issued under compensation plans, net— 55 — 82 — — 82 — 82 
Stock-based compensation expense— — — 1,080 — — 1,080 — 1,080 
Shares repurchased— (20)— (241)— (185)(426)— (426)
Other comprehensive income— — — — 87 — 87 — 87 
Stock issued - other— 1 — 24 — — 24 — 24 
Balance at March 31, 2020$ 16,685 $166 $153,477 $(359)$221,698 $374,982 $4 $374,986 
Balance at December 31, 2020 16,734 $167 $158,618 $23 $270,480 $429,288 $4 $429,292 
Net income— — — — — 19,928 19,928 — 19,928 
Stock issued under compensation plans, net— 123 1 109 — — 110 — 110 
Stock-based compensation expense— — — 1,487 — — 1,487 — 1,487 
Shares repurchased— (41)— (2,231)— (387)(2,618)— (2,618)
Other comprehensive income— — — — 253 — 253 — 253 
Stock issued - other— 1 — 12 — — 12 — 12 
Balance at March 31, 2021$ 16,817 $168 $157,995 $276 $290,021 $448,460 $4 $448,464 
The accompanying notes are an integral part of these consolidated financial statements.
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MYR GROUP INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended
March 31,
(in thousands)20212020
Cash flows from operating activities:
Net income$19,928 $9,932 
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation and amortization of property and equipment11,293 10,641 
Amortization of intangible assets578 1,228 
Stock-based compensation expense1,487 1,080 
Deferred income taxes(47)236 
Gain on sale of property and equipment(683)(1,050)
Other non-cash items529 (305)
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable, net12,592 38,089 
Contract assets, net(6,991)(7,467)
Receivable for insurance claims in excess of deductibles802 (754)
Other assets15,314 5,195 
Accounts payable29,198 (18,091)
Contract liabilities(18,087)(4,697)
Accrued self insurance(285)(77)
Other liabilities(6,238)1,283 
Net cash flows provided by operating activities59,390 35,243 
Cash flows from investing activities:
Proceeds from sale of property and equipment651 870 
Purchases of property and equipment(7,031)(9,138)
Net cash flows used in investing activities(6,380)(8,268)
Cash flows from financing activities:
Net repayments under revolving lines of credit (2,263)
Payment of principal obligations under equipment notes (2,177)
Payment of principal obligations under finance leases(273)(312)
Proceeds from exercise of stock options110 82 
Repurchase of common shares(2,618)(425)
Other financing activities12 23 
Net cash flows used in financing activities(2,769)(5,072)
Effect of exchange rate changes on cash160 (303)
Net increase in cash and cash equivalents50,401 21,600 
Cash and cash equivalents:
Beginning of period22,668 12,397 
End of period$73,069 $33,997 
The accompanying notes are an integral part of these consolidated financial statements.
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MYR GROUP INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. Organization, Business and Basis of Presentation
Organization and Business
MYR Group Inc. (the “Company”) is a holding company of specialty electrical construction service providers and is currently conducting operations through wholly owned subsidiaries, including: The L. E. Myers Co., a Delaware corporation; Harlan Electric Company, a Michigan corporation; Great Southwestern Construction, Inc., a Colorado corporation; Sturgeon Electric Company, Inc., a Michigan corporation; MYR Energy Services, Inc., a Delaware corporation; E.S. Boulos Company, a Delaware corporation; High Country Line Construction, Inc., a Nevada corporation; Sturgeon Electric California, LLC, a Delaware limited liability company; GSW Integrated Services, LLC, a Delaware limited liability company; Huen Electric, Inc., a Delaware corporation; CSI Electrical Contractors, Inc., a Delaware corporation; MYR Transmission Services Canada, Ltd., a British Columbia corporation; Northern Transmission Services, Ltd., a British Columbia corporation and Western Pacific Enterprises Ltd., a British Columbia corporation.
The Company performs construction services in two business segments: Transmission and Distribution (“T&D”), and Commercial and Industrial (“C&I”). T&D customers include investor-owned utilities, cooperatives, private developers, government-funded utilities, independent power producers, independent transmission companies, industrial facility owners and other contractors. T&D provides a broad range of services, which include design, engineering, procurement, construction, upgrade, maintenance and repair services, with a particular focus on construction, maintenance and repair. C&I customers include general contractors, commercial and industrial facility owners, government agencies and developers. C&I provides a broad range of services, which include the design, installation, maintenance and repair of commercial and industrial wiring, the installation of traffic networks and the installation of bridge, roadway and tunnel lighting.
The COVID-19 pandemic caused a slowdown of certain projects due to specific state, local, municipal and customer mandated stay-at-home orders and new project requirements that were established to protect construction workers and the general public, most of which have impacted our C&I segment. Although the majority of stay-at-home orders have been phased out, we are still experiencing impacts associated with the COVID-19 project-specific protocols. We expect the project-specific requirements to remain in place which will continue to impact project schedules and workflow going forward. Key estimates that could potentially be impacted include estimates of costs to complete contracts, the recoverability of goodwill and intangibles and allowance for doubtful accounts.
Basis of Presentation
Interim Consolidated Financial Information
The accompanying unaudited consolidated financial statements of the Company were prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial reporting pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC. The Company believes that the disclosures made are adequate to make the information presented not misleading. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary to fairly state the financial position, results of operations, comprehensive income, stockholders’ equity and cash flows with respect to the interim consolidated financial statements, have been included. The consolidated balance sheet as of December 31, 2020 has been derived from the audited financial statements as of that date. The results of operations and comprehensive income are not necessarily indicative of the results for the full year or the results for any future periods. These financial statements should be read in conjunction with the audited financial statements and related notes for the year ended December 31, 2020, included in the Company’s Annual Report on Form 10-K, which was filed with the SEC on March 3, 2021 (the "2020 Annual Report").
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Joint Ventures and Noncontrolling Interests
The Company accounts for investments in joint ventures using the proportionate consolidation method for income statement reporting and under the equity method for balance sheet reporting, unless the Company has a controlling interest causing the joint venture to be consolidated with equity owned by other joint venture partners recorded as noncontrolling interests. Under the proportionate consolidation method, joint venture activity is allocated to the appropriate line items found on the consolidated statements of operations in proportion to the percentage of participation the Company has in the joint venture. Under the equity method the net investment in joint ventures is stated as a single item on the Company’s consolidated balance sheets. If an investment in a joint venture contains a recourse or unfunded commitments to provide additional equity, distributions and/or losses in excess of the investment a liability is recorded in other current liabilities on the Company’s consolidated balance sheets.
For joint ventures which the Company does not have a controlling interest, the Company’s share of any profits and assets and its share of any losses and liabilities are recognized based on the Company’s stated percentage partnership interest in the joint venture, and are normally recorded by the Company one month in arrears. The investments in joint ventures are recorded at cost and the carrying amounts are adjusted to recognize the Company’s proportionate share of cumulative income or loss, additional contributions made and dividends and capital distributions received. The Company records the effect of any impairment or any other-than-temporary decrease in the value of the joint venture investment as incurred, which may or may not be one month in arrears, depending on when the Company obtains the joint venture activity information. Additionally, the Company continually assesses the fair value of its investment in unconsolidated joint ventures despite using information that is one month in arrears for regular reporting purposes. The Company includes only its percentage ownership of each joint venture in its backlog.
The Company is the majority controlling interest in a joint venture. As a result, the Company has consolidated the carrying value of the joint ventures’ assets and liabilities and results of operations in the Company’s consolidated financial statements. The equity owned by the other joint venture partners has been recorded as noncontrolling interest in the Company’s consolidated balance sheets, consolidated statements of stockholders’ equity, and their portions, if material, of net income (loss) and other comprehensive income shown as net income or other comprehensive income attributable to noncontrolling interest in the Company’s consolidated statements of operations and other comprehensive income. Additionally, the joint venture associated with the Company’s noncontrolling interest is a partnership, and consequently, the tax effect of only the Company’s share of the joint venture income is recognized by the Company. The majority controlled joint venture made no distributions to its partners, and the Company made no capital contributions to the joint venture, during the three months ended March 31, 2021. Additionally, there have been no changes in ownership during the three months ended March 31, 2021. The project associated with this joint venture was substantially completed in 2019.
Foreign Currency
The functional currency for the Company’s Canadian operations is the Canadian dollar. Assets and liabilities denominated in Canadian dollars are translated into U.S. dollars at the end-of-period exchange rate. Revenues and expenses are translated using average exchange rates for the periods reported. Equity accounts are translated at historical rates. Cumulative translation adjustments are included as a separate component of accumulated other comprehensive income in shareholders’ equity. Foreign currency transaction gains and losses, arising primarily from changes in exchange rates on short-term monetary assets and liabilities, and ineffective long-term monetary assets and liabilities are recorded in the “other income, net” line on the Company’s consolidated statements of operations. Foreign currency losses and gains, recorded in other income, net, for the three months ended March 31, 2021 and 2020 were not significant. Effective foreign currency transaction gains and losses, arising primarily from long-term monetary assets and liabilities, are recorded in the foreign currency translation adjustment line on the Company’s consolidated statements of comprehensive income.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the period reported. Actual results could differ from those estimates.
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The most significant estimates are related to estimates of costs to complete contracts, pending change orders and claims, shared savings, insurance reserves, income tax reserves, estimates surrounding stock-based compensation, the recoverability of goodwill and intangibles and allowance for doubtful accounts. The Company estimates a cost accrual every quarter that represents costs incurred but not invoiced for services performed or goods delivered during the period, and estimates revenue from the contract cost portion of these accruals based on current gross margin rates to be consistent with its cost method of revenue recognition.
As of March 31, 2021 and 2020, the Company had recognized revenues of $14.0 million and $36.4 million, respectively, related to significant change orders and/or claims that had been included as contract price adjustments on certain contracts, some of which are multi-year projects. These change orders and/or claims are in the process of being negotiated in the normal course of business, and a portion of these recognized revenues had been included in multiple periods.
The cost-to-cost method of accounting requires the Company to make estimates about the expected revenue and gross profit on each of its contracts in process. During the three months ended March 31, 2021, changes in estimates pertaining to certain projects increased consolidated gross margin by 0.1%, which resulted in increases in operating income of $0.6 million, net income of $0.4 million and diluted earnings per common share of $0.02.
During the three months ended March 31, 2020, changes in estimates pertaining to certain projects increased consolidated gross margin by 0.1%. These changes in estimates did not have a significant impact to consolidated operating income, net income or diluted earnings per common share.
Recent Accounting Pronouncements
Changes to U.S. GAAP are typically established by the Financial Accounting Standards Board (“FASB”) in the form of accounting standards updates (“ASUs”) to the FASB’s Accounting Standards Codification (“ASC”). The Company considers the applicability and impact of all ASUs. The Company, based on its assessment, determined that any recently issued or proposed ASUs not listed below are either not applicable to the Company or adoption will have minimal impact on its consolidated financial statements.
Recently Adopted Accounting Pronouncements
In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes, eliminates certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects of the current guidance to promote consistent application among reporting entities. The Company adopted this ASU in January 2021 and there was no effect on the consolidated financial statements or disclosures.
2. Contract Assets and Liabilities
Contracts with customers usually stipulate the timing of payment, which is defined by the terms found within the various contracts under which work was performed during the period. Therefore, contract assets and liabilities are created when the timing of costs incurred on work performed does not coincide with the billing terms, which frequently include retention provisions contained in each contract.
The Company’s consolidated balance sheets present contract assets, which contain unbilled revenue and contract retainages associated with contract work that has been completed and billed but not paid by customers, pursuant to retainage provisions, that are generally due once the job is completed and approved. The allowance for doubtful accounts associated with contract assets was $0.4 million as of March 31, 2021 and December 31, 2020.
Contract assets consisted of the following:
(in thousands)March 31,
2021
December 31,
2020
Change
Unbilled revenue, net$108,268 $97,543 $10,725 
Contract retainages, net84,615 88,260 (3,645)
Contract assets, net$192,883 $185,803 $7,080 
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The Company’s consolidated balance sheets present contract liabilities which contain deferred revenue and an accrual for contracts in a loss provision.
Contract liabilities consisted of the following:
(in thousands)March 31,
2021
December 31,
2020
Change
Deferred revenue$138,180 $155,570 $(17,390)
Accrued loss provision2,134 2,826 (692)
Contract liabilities$140,314 $158,396 $(18,082)
The following table provides information about contract assets and contract liabilities from contracts with customers:
(in thousands)March 31,
2021
December 31,
2020
Change
Contract assets, net$192,883 $185,803 $7,080 
Contract liabilities(140,314)(158,396)18,082 
Net contract assets (liabilities)$52,569 $27,407 $25,162 
The difference between the opening and closing balances of the Company’s contract assets and contract liabilities primarily results from the timing of the Company’s billings in relation to its performance of work. The amounts of revenue recognized in the period that were included in the opening contract liability balances were $41.4 million for the three months ended March 31, 2021 and $25.7 million for the three months ended March 31, 2020. This revenue consists primarily of work performed on previous billings to customers.
The net asset position for contracts in process consisted of the following:
(in thousands)March 31,
2021
December 31,
2020
Costs and estimated earnings on uncompleted contracts$3,705,959 $3,921,376 
Less: billings to date3,735,871 3,979,403 
$(29,912)$(58,027)
The net asset position for contracts in process is included within the contract asset and contract liability in the accompanying consolidated balance sheets as follows:
(in thousands)March 31,
2021
December 31,
2020
Unbilled revenue $108,268 $97,543 
Deferred revenue (138,180)(155,570)
$(29,912)$(58,027)

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3. Lease Obligations
From time-to-time, the Company enters into non-cancelable leases for some of our facility, vehicle and equipment needs. These leases allow the Company to conserve cash by paying a monthly lease rental fee for the use of facilities, vehicles and equipment rather than purchasing them. The Company’s leases have remaining terms ranging from one to six years, some of which may include options to extend the leases for up to five years, and some of which may include options to terminate the leases within one year. Currently, all the Company’s leases contain fixed payment terms. The Company may decide to cancel or terminate a lease before the end of its term, in which case we are typically liable to the lessor for the remaining lease payments under the term of the lease. Additionally, all of the Company's month-to-month leases are cancelable, by the Company or the lessor, at any time and are not included in our right-of-use asset or liability. At March 31, 2021, the Company had several leases with residual value guarantees. Typically, the Company has purchase options on the equipment underlying its long-term leases and many of its short-term rental arrangements. The Company may exercise some of these purchase options when the need for equipment is on-going and the purchase option price is attractive. Leases are accounted for as operating or finance leases, depending on the terms of the lease.
The following is a summary of the lease-related assets and liabilities recorded:
March 31,
2021
December 31,
2020
(in thousands)Classification on the Consolidated Balance Sheet
Assets
Operating lease right-of-use assetsOperating lease right-of-use assets$21,724 $22,291 
Finance lease right-of-use assetsProperty and equipment, net of accumulated depreciation140 390 
Total right-of-use lease assets$21,864 $22,681 
Liabilities
Current
Operating lease obligationsCurrent portion of operating lease obligations$6,986 $6,612 
Finance lease obligationsCurrent portion of finance lease obligations53 318 
Total current obligations7,039 6,930 
Non-current
Operating lease obligationsOperating lease obligations, net of current maturities14,787 15,730 
Total non-current obligations14,787 15,730 
Total lease obligations$21,826 $22,660 
The following is a summary of the lease terms and discount rates:
March 31,
2021
December 31,
2020
Weighted-average remaining lease term - finance leases0.2 years0.4 years
Weighted-average remaining lease term - operating leases3.2 years3.4 years
Weighted-average discount rate - finance leases2.6 %2.6 %
Weighted-average discount rate - operating leases3.9 %3.9 %
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The following is a summary of certain information related to the lease costs for finance and operating leases:
(in thousands)Three months ended
March 31,
20212020
Lease cost:
Finance lease cost:
Amortization of right-of-use assets$189 $249 
Interest on lease liabilities3 11 
Operating lease cost2,486 2,231 
Variable lease costs76 71 
Total lease cost$2,754 $2,562 
The following is a summary of other information and supplemental cash flow information related to finance and operating leases:
Three months ended March 31,
(in thousands)20212020
Other information:
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases$2,540 $2,069 
Right-of-use asset obtained in exchange for new operating lease obligations$1,502 $3,024 
The future undiscounted minimum lease payments, as reconciled to the discounted minimum lease obligation indicated on the Company’s consolidated balance sheets, under financial leases, less interest, and under operating leases, less imputed interest, as of March 31, 2021 were as follows:
(in thousands)Finance
Lease Obligations
Operating Lease
Obligations
Total
Lease
Obligations
Remainder of 2021
$53 $7,083 $7,136 
2022 8,036 8,036 
2023 5,736 5,736 
2024 2,968 2,968 
2025 1,132 1,132 
2026 796 796 
Thereafter   
Total minimum lease payments53 25,751 25,804 
Financing component (3,978)(3,978)
Net present value of minimum lease payments53 21,773 21,826 
Less: current portion of finance and operating lease obligations(53)(6,986)(7,039)
Long-term finance and operating lease obligations$ $14,787 $14,787 
The financing component for finance lease obligations represents the interest component of finance leases that will be recognized as interest expense in future periods. The financing component for operating lease obligations represents the effect of discounting the lease payments to their present value.
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 market rental rates. As of March 31, 2021, the minimum lease payments required under these leases totaled $3.0 million, which are due over the next 3.3 years.
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4. Fair Value Measurements
The Company uses the three-tier hierarchy of fair value measurement, which prioritizes the inputs used in measuring fair value based upon their degree of availability in external active markets. These tiers include: Level 1 (the highest priority), defined as observable inputs, such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3 (the lowest priority), defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.
As of March 31, 2021 and December 31, 2020, the Company determined that the carrying value of cash and cash equivalents approximated fair value based on Level 1 inputs. As of March 31, 2021 and December 31, 2020, the fair values of the Company’s long-term debt and finance lease obligations were based on Level 2 inputs. The Company’s long-term debt was based on variable and fixed interest rates at March 31, 2021 and December 31, 2020, for new issues with similar remaining maturities, and approximated carrying value. In addition, based on borrowing rates currently available to the Company for borrowings with similar terms, the carrying values of the Company’s finance lease obligations also approximated fair value.
5. Debt
The table below reflects the Company’s total debt, including borrowings under its credit agreement and master loan agreements for equipment notes:
(dollar amounts in thousands)Inception DateStated Interest
Rate (per annum)
Payment
Frequency
Term
(years)
Outstanding
Balance as of
March 31, 2021
Outstanding
Balance as of
December 31, 2020
Credit Agreement
Revolving loans9/13/2019VariableVariable5$ $ 
Equipment Notes
Equipment Note 66/25/20192.89%Semi-annual712,896 12,896 
Equipment Note 76/24/20193.09%Semi-annual56,980 6,980 
Equipment Note 812/27/20192.75%Semi-annual55,513 5,513 
Equipment Note 912/24/20193.01%Semi-annual74,031 4,031 
29,420 29,420 
Total debt29,420 29,420 
Less: current portion of long-term debt(4,381)(4,381)
Long-term debt$25,039 $25,039 
Credit Agreement
On September 13, 2019, the Company entered into a five-year amended and restated credit agreement (the “Credit Agreement”) with a syndicate of banks led by JPMorgan Chase Bank, N.A. and Bank of America, N.A, that provides for a $375 million facility (the “Facility”), subject to certain financial covenants as defined in the Credit Agreement, that may be used for revolving loans of which $150 million may be used for letters of credit. The Facility also allows for revolving loans and letters of credit in Canadian dollars and other currencies, up to the U.S. dollar equivalent of $75 million. The Company has an expansion option to increase the commitments under the Facility or enter into incremental term loans, subject to certain conditions, by up to an additional $200 million upon receipt of additional commitments from new or existing lenders. Subject to certain exceptions, the Facility is secured by substantially all of the assets of the Company and its domestic subsidiaries, and by a pledge of substantially all of the capital stock of the Company’s domestic subsidiaries and 65% of the capital stock of the direct foreign subsidiaries of the Company. Additionally, subject to certain exceptions, the Company’s domestic subsidiaries also guarantee the repayment of all amounts due under the Credit Agreement. If an event of default occurs and is continuing, on the terms and subject to the conditions set forth in the Credit Agreement, amounts outstanding under the Facility may be accelerated and may become or be declared immediately due and payable. Borrowings under the Credit Agreement are used for refinancing existing indebtedness, working capital, capital expenditures, acquisitions, share repurchases, and other general corporate purposes.
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Amounts borrowed under the Credit Agreement bear interest, at the Company’s option, at a rate equal to either (1) the Alternate Base Rate (as defined in the Credit Agreement), plus an applicable margin ranging from 0.00% to 0.75%; or (2) Adjusted LIBO Rate (as defined in the Credit Agreement) plus an applicable margin ranging from 1.00% to 1.75%. The applicable margin is determined based on the Company’s consolidated leverage ratio (the “Leverage Ratio”) which is defined in the Credit Agreement as Consolidated Total Indebtedness (as defined in the Credit Agreement) divided by Consolidated EBITDA (as defined in the Credit Agreement). Letters of credit issued under the Facility are subject to a letter of credit fee of 1.00% to 1.75% for non-performance letters of credit or 0.50% to 0.875% for performance letters of credit, based on the Company’s consolidated Leverage Ratio. The Company is subject to a commitment fee of 0.15% to 0.25%, based on the Company’s consolidated Leverage Ratio, on any unused portion of the Facility. The Credit Agreement restricts certain types of payments when the Company’s consolidated Leverage Ratio exceeds 2.50 or the Company's consolidated Liquidity (as defined in the Credit Agreement) is less than $50 million.
Under the Credit Agreement, the Company is subject to certain financial covenants and is limited to a maximum consolidated Leverage Ratio of 3.0 and a minimum interest coverage ratio of 3.0, which is defined in the Credit Agreement as Consolidated EBITDA (as defined in the Credit Agreement) divided by interest expense (as defined in the Credit Agreement). The Credit Agreement also contains covenants including limitations on asset sales, investments, indebtedness and liens. The Company was in compliance with all of its financial covenants under the Credit Agreement as of March 31, 2021.
As of March 31, 2021, the Company had no debt outstanding under the Facility and letters of credit outstanding under the Facility of approximately $12.3 million, all of which was related to the Company's payment obligation under its insurance programs.
As of December 31, 2020, the Company had no debt outstanding under the Facility and letters of credit outstanding under the Facility of approximately $10.4 million, including $9.8 million related to the Company's payment obligation under its insurance programs and approximately $0.6 million related to contract performance obligations.
The Company had remaining deferred debt issuance costs totaling $1.1 million as of March 31, 2021, related to the line of credit. As permitted, debt issuance costs have been deferred and are presented as an asset within other assets, which is amortized as interest expense over the term of the line of credit.
Equipment Notes
The Company has entered into Master Equipment Loan and Security Agreements (the “Master Loan Agreements”) with multiple banks. The Master Loan Agreements may be used for the financing of equipment between the Company and the lending banks pursuant to one or more equipment notes ("Equipment Note"). Each Equipment Note executed under the Master Loan Agreements constitutes a separate, distinct and independent financing of equipment and a contractual obligation of the Company, which may contain prepayment clauses.
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As of March 31, 2021, the Company had four Equipment Notes outstanding under the Master Loan Agreements that are collateralized by equipment and vehicles owned by the Company. The following table sets forth our remaining principal payments for the Company’s outstanding Equipment Notes as of March 31, 2021:
(in thousands)Future
Equipment Notes
Principal Payments
Remainder of 2021
$4,381 
20224,511 
20234,645 
20247,102 
20252,189 
20266,592 
Thereafter 
Total future principal payments$29,420 
Less: current portion of equipment notes(4,381)
Long-term principal obligations$25,039 

6. Revenue Recognition
Disaggregation of Revenue
A majority of the Company’s revenues are earned through contracts with customers that normally provide for payment upon completion of specified work or units of work as identified in the contract. Although there is considerable variation in the terms of these contracts, they are primarily structured as fixed-price contracts, under which the Company agrees to perform a defined scope of a project for a fixed amount, or unit-price contracts, under which the Company agrees to do the work at a fixed price per unit of work as specified in the contract. The Company also enters into time-and-equipment and time-and-materials contracts under which the Company is paid for labor and equipment at negotiated hourly billing rates and for other expenses, including materials, as incurred at rates agreed to in the contract. Finally, the Company sometimes enters into cost-plus contracts, where the Company is paid for costs plus a negotiated margin. On occasion, time-and-equipment, time-and-materials and cost-plus contracts require the Company to include a guaranteed not-to-exceed maximum price.
Historically, fixed-price and unit-price contracts have had the highest potential margins; however, they have had a greater risk in terms of profitability because cost overruns may not be recoverable. Time-and-equipment, time-and-materials and cost-plus contracts have historically had less margin upside, but generally have had a lower risk of cost overruns. The Company also provides services under master service agreements (“MSAs”) and other variable-term service agreements. MSAs normally cover maintenance, upgrade and extension services, as well as new construction. Work performed under MSAs is typically billed on a unit-price, time-and-materials or time-and-equipment basis. MSAs are typically one to three years in duration; however, most of the Company’s contracts, including MSAs, may be terminated by the customer on short notice, typically 30 to 90 days, even if the Company is not in default under the contract. Under MSAs, customers generally agree to use the Company for certain services in a specified geographic region. Most MSAs include no obligation for the contract counterparty to assign specific volumes of work to the Company and do not require the counterparty to use the Company exclusively, although in some cases the MSA contract gives the Company a right of first refusal for certain work. Additional information related to the Company’s market types is provided in Note 10–Segment Information.
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The components of the Company’s revenue by contract type for the three months ended March 31, 2021 and 2020 were as follows:
Three months ended March 31, 2021
T&DC&ITotal
(dollars in thousands)AmountPercentAmountPercentAmountPercent
Fixed price$151,931 48.2 %$227,709 82.0 %$379,640 64.1 %
Unit price85,269 27.1 18,431 6.6 103,700 17.5 
T&E70,278 22.3 14,382 5.2 84,660 14.3 
Other7,430 2.4 17,056 6.2 24,486 4.1 
$314,908 100.0 %$277,578 100.0 %$592,486 100.0 %
Three months ended March 31, 2020
T&DC&ITotal
(dollars in thousands)AmountPercentAmountPercentAmountPercent
Fixed price$121,002 46.7 %$218,539 84.3 %$339,541 65.5 %
Unit price63,310 24.4 18,076 7.0 81,386 15.7 
T&E68,051 26.2 15,802 6.1 83,853 16.2 
Other6,907 2.7 6,783 2.6 13,690 2.6 
$259,270 100.0 %$259,200 100.0 %$518,470 100.0 %
The components of the Company’s revenue by market type for the three months ended March 31, 2021 and 2020 were as follows:
Three months ended March 31, 2021Three months ended March 31, 2020
(dollars in thousands)AmountPercentSegmentAmountPercentSegment
Transmission
$211,227 35.7 %T&D$171,566 33.1 %T&D
Distribution
103,681 17.5 T&D87,704 16.9 T&D
Electrical construction
277,578 46.8 C&I259,200 50.0 C&I
Total revenue$592,486 100.0 %$518,470 100.0 %
Remaining Performance Obligations
As of March 31, 2021, the Company had $1.53 billion of remaining performance obligations. The Company’s remaining performance obligations include projects that have a written award, a letter of intent, a notice to proceed or an agreed upon work order to perform work on mutually accepted terms and conditions.
The following table summarizes the amount of remaining performance obligations as of March 31, 2021 that the Company expects to be realized and the amount of the remaining performance obligations that the Company reasonably estimates will not be recognized within the next twelve months.
Remaining Performance Obligations at March 31, 2021
(in thousands)TotalAmount estimated to not be
recognized within 12 months
Total at December 31, 2020
T&D$584,421 $152,951 $645,422 
C&I940,758 190,950 889,596 
Total$1,525,179 $343,901 $1,535,018 
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The Company expects a vast majority of the remaining performance obligations to be recognized within twenty-four months, although the timing of the Company’s performance is not always under its control. Additionally, the difference between the remaining performance obligations and backlog is due to the exclusion of a portion of the Company’s MSAs under certain contract types from the Company’s remaining performance obligations as these contracts can be canceled for convenience at any time by the Company or the customer without considerable cost incurred by the customer. Additional information related to backlog is provided in Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
7. Income Taxes
The U.S. federal statutory tax rate was 21% for each of the three months ended March 31, 2021 and 2020. The Company’s effective tax rate for the three months ended March 31, 2021 was 26.2% of pretax income compared to the effective tax rate for the three months ended March 31, 2020 of 29.1%.
The difference between the U.S. federal statutory tax rate and the Company’s effective tax rate for the three months ended March 31, 2021 was primarily due to state income taxes and foreign earnings and the associated impact of the global intangible low tax income (“GILTI”) and other permanent difference items, partially offset by a favorable impact from stock compensation excess tax benefits.
The difference between the U.S. federal statutory tax rate and the Company’s effective tax rate for the three months ended March 31, 2020, was primarily due to state income taxes and excess tax expense pertaining to the vesting of stock awards related to the Company’s stock compensation program along with foreign earnings and the associated impact of GILTI.
The Company had unrecognized tax benefits of approximately $0.4 million as of March 31, 2021 and December 31, 2020, respectively, which were included in other liabilities in the accompanying consolidated balance sheets.
The Company’s policy is to recognize interest and penalties related to income tax liabilities as a component of income tax expense in the consolidated statements of operations. The amount of interest and penalties charged to income tax expense related to unrecognized tax benefits was not significant for the three months ended March 31, 2021 and 2020.
The Company is subject to taxation in various jurisdictions. The Company’s 2017 through 2019 tax returns are subject to examination by U.S. federal authorities. The Company’s tax returns are subject to examination by various state authorities for the years 2016 through 2019.
8. Commitments and Contingencies
Purchase Commitments
As of March 31, 2021, the Company had approximately $18.0 million in outstanding purchase orders for certain construction equipment, with cash payments scheduled to occur over the next nine months.
Insurance and Claims Accruals
The Company carries insurance policies, which are subject to certain deductibles, for workers’ compensation, general liability, automobile liability and other insurance coverage. The deductible per occurrence for each line of coverage is up to $1.0 million, except for wildfire coverage which has a deductible of $2.0 million. The Company’s health benefit plans are subject to stop-loss limits of up to $0.2 million for qualified individuals. Losses up to the deductible and stop-loss amounts are accrued based upon the Company’s estimates of the ultimate liability for claims reported and an estimate of claims incurred but not yet reported.
The insurance and claims accruals are based on known facts, actuarial estimates and historical trends. While recorded accruals are based on the ultimate liability, which includes amounts in excess of the deductible, a corresponding receivable for amounts in excess of the deductible is included in current and long-term assets in the Company’s consolidated balance sheets.
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Performance and Payment Bonds and Parent Guarantees
In certain circumstances, the Company is required to provide performance and payment bonds in connection with its future performance on certain contractual commitments. The Company has indemnified its sureties for any expenses paid out under these bonds. As of March 31, 2021, an aggregate of approximately $1.20 billion in original face amount of bonds issued by the Company’s sureties were outstanding. The Company estimated the remaining cost to complete these bonded projects was approximately $632.8 million as of March 31, 2021.
From time to time, the Company guarantees the obligations of wholly owned subsidiaries, including obligations under certain contracts with customers, certain lease agreements, and, in some states, obligations in connection with obtaining contractors’ licenses. Additionally, from time to time the Company is required to post letters of credit to guarantee the obligations of wholly owned subsidiaries, which reduces the borrowing availability under the Facility.
Indemnities
From time to time, pursuant to its service arrangements, the Company indemnifies its customers for claims related to the services it provides under those service arrangements. These indemnification obligations may subject the Company to indemnity claims and liabilities and related litigation. The Company is not aware of any material unrecorded liabilities for asserted claims in connection with these indemnification obligations.
Collective Bargaining Agreements
Most of the Company’s subsidiaries’ craft labor employees are covered by collective bargaining agreements. The agreements require the subsidiaries to pay sp