SEC Filing | MYR Group Inc.

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myrg-20210930

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 September 30, 2021


☐			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)

Delaware

36-3158643

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer Identification No.)

12150 East 112th Avenue

Henderson,

80640

(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 class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	MYRG	The 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

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 October 22, 2021, there were 16,869,947 outstanding shares of the registrant’s $0.01 par value common stock.

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INDEX


		Page
	Part I—Financial Information
Item 1.	Financial Statements	2
	Consolidated Balance Sheets as of September 30, 2021 (unaudited) and December 31, 2020	2
	Unaudited Consolidated Statements of Operations and Comprehensive Income for the Three and Nine Months Ended September 30, 2021 and 2020	3
	Unaudited Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2021 and 2020	4
	Unaudited Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2021 and 2020	5
	Notes to Unaudited Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32
Item 4.	Controls and Procedures	33
	Part II—Other Information
Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	34
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 6.	Exhibits	35

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.

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PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

MYR GROUP INC.

CONSOLIDATED BALANCE SHEETS


(in thousands, except share and per share data)	September 30, 2021		December 31, 2020
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	73,006	$	22,668
Accounts receivable, net of allowances of $2,166 and $1,696, respectively	362,032		385,938
Contract assets, net of allowances of $376 and $359, respectively	219,445		185,803
Current portion of receivable for insurance claims in excess of deductibles	10,639		11,859
Refundable income taxes	8,934		1,534
Other current assets	26,579		28,882
Total current assets	700,635		636,684
Property and equipment, net of accumulated depreciation of $313,999 and $294,366, respectively	184,863		185,114
Operating lease right-of-use assets	21,447		22,291
Goodwill	66,065		66,065
Intangible assets, net of accumulated amortization of $16,201 and $14,467, respectively	49,632		51,365
Receivable for insurance claims in excess of deductibles	33,536		27,043
Investment in joint ventures	3,786		3,040
Other assets	3,863		4,257
Total assets	$	1,063,827	$	995,859

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	1,025	$	4,381
Current portion of operating lease obligations	7,451		6,612
Current portion of finance lease obligations	—		318
Accounts payable	193,218		162,580
Contract liabilities	149,847		158,396
Current portion of accrued self-insurance	23,945		24,395
Other current liabilities	80,215		86,718
Total current liabilities	455,701		443,400
Deferred income tax liabilities	19,682		18,339
Long-term debt	3,986		25,039
Accrued self-insurance	51,449		45,428
Operating lease obligations, net of current maturities	14,015		15,730

Other liabilities	22,814		18,631
Total liabilities	567,647		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 September 30, 2021 and December 31, 2020	—		—
Common stock—$0.01 par value per share; 100,000,000 authorized shares; 16,869,947 and 16,734,239 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively	168		167
Additional paid-in capital	161,593		158,618
Accumulated other comprehensive income	100		23
Retained earnings	334,315		270,480
Total stockholders’ equity attributable to MYR Group Inc.	496,176		429,288
Noncontrolling interest	4		4
Total stockholders’ equity	496,180		429,292
Total liabilities and stockholders’ equity	$	1,063,827	$	995,859

The accompanying notes are an integral part of these consolidated financial statements.

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MYR GROUP INC.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME


	Three months ended September 30,				Nine months ended September 30,
(in thousands, except per share data)	2021		2020		2021		2020

Contract revenues	$	610,182	$	607,901	$	1,852,241	$	1,639,422
Contract costs	526,259		531,429		1,610,343		1,440,013
Gross profit	83,923		76,472		241,898		199,409
Selling, general and administrative expenses	53,072		51,443		154,609		137,688
Amortization of intangible assets	578		578		1,734		3,009
Gain on sale of property and equipment	(679)		(478)		(2,473)		(1,967)
Income from operations	30,952		24,929		88,028		60,679
Other income (expense):
Interest income	23		—		51		6
Interest expense	(305)		(1,113)		(1,458)		(3,941)
Other income (expense), net	69		18		190		(556)
Income before provision for income taxes	30,739		23,834		86,811		56,188
Income tax expense	7,568		6,542		22,493		15,579
Net income	$	23,171	$	17,292	$	64,318	$	40,609


Income per common share:
—Basic	$	1.37	$	1.04	$	3.82	$	2.44
—Diluted	$	1.35	$	1.02	$	3.75	$	2.42
Weighted average number of common shares and potential common shares outstanding:
—Basic	16,868		16,698		16,828		16,670
—Diluted	17,167		16,882		17,132		16,798

Net income	$	23,171	$	17,292	$	64,318	$	40,609
Other comprehensive income (loss):
Foreign currency translation adjustment	(589)		(5)		77		43
Other comprehensive income (loss):	(589)		(5)		77		43
Total comprehensive income	$	22,582	$	17,287	$	64,395	$	40,652

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


	Preferred		Common Stock			Additional Paid-In		Accumulated Other Comprehensive		Retained		MYR Group Inc. Stockholders’		Noncontrolling
(in thousands)	Stock		Shares	Amount		Capital		Income (Loss)		Earnings		Equity		Interest		Total

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
Net income	—		—	—		—		—		13,385		13,385		—		13,385
Stock issued under compensation plans, net	—		23	1		—		—		—		1		—		1
Stock-based compensation expense	—		—	—		1,093		—		—		1,093		—		1,093


Other comprehensive loss	—		—	—		—		(39)		—		(39)		—		(39)
Stock issued - other	—		1	—		24		—		—		24		—		24
Balance at June 30, 2020	—		16,709	167		154,594		(398)		235,083		389,446		4		389,450
Net income	—		—	—		—		—		17,292		17,292		—		17,292
Stock issued under compensation plans, net	—		10	—		224		—		—		224		—		224
Stock-based compensation expense	—		—	—		1,631		—		—		1,631		—		1,631
Other comprehensive income	—		—	—		—		(5)		—		(5)		—		(5)
Stock issued - other	—		—	—		12		—		—		12		—		12
Balance at September 30, 2020	$	—	16,719	$	167	$	156,461	$	(403)	$	252,375	$	408,600	$	4	$	408,604

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
Net income	—		—	—		—		—		21,219		21,219		—		21,219
Stock issued under compensation plans, net	—		60	1		318		—		—		319		—		319
Stock-based compensation expense	—		—	—		1,948		—		—		1,948		—		1,948
Shares repurchased	—		(10)	(1)		(637)		—		(96)		(734)		—		(734)
Other comprehensive income	—		—	—		—		413		—		413		—		413

Balance at June 30, 2021	—		16,867	168		159,624		689		311,144		471,625		4		471,629
Net income	—		—	—		—		—		23,171		23,171		—		23,171
Stock issued under compensation plans, net	—		3	—		54		—		—		54		—		54
Stock-based compensation expense	—		—	—		1,915		—		—		1,915		—		1,915
Other comprehensive income	—		—	—		—		(589)		—		(589)		—		(589)

Balance at September 30, 2021	$	—	16,870	$	168	$	161,593	$	100	$	334,315	$	496,176	$	4	$	496,180

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


	Nine months ended September 30,
(in thousands)	2021		2020

Cash flows from operating activities:
Net income	$	64,318	$	40,609
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation and amortization of property and equipment	32,884		32,021
Amortization of intangible assets	1,734		3,009
Stock-based compensation expense	5,350		3,804
Deferred income taxes	1,364		712
Gain on sale of property and equipment	(2,473)		(1,967)
Other non-cash items	1,171		654
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable, net	23,929		(12,869)
Contract assets, net	(33,642)		(4,754)
Receivable for insurance claims in excess of deductibles	(5,273)		3,103
Other assets	(5,786)		7,074
Accounts payable	29,874		7,596
Contract liabilities	(8,515)		20,161
Accrued self insurance	5,571		(2,257)
Other liabilities	(2,291)		31,730
Net cash flows provided by operating activities	108,215		128,626
Cash flows from investing activities:
Proceeds from sale of property and equipment	2,489		2,147

Purchases of property and equipment	(32,701)		(27,470)
Net cash flows used in investing activities	(30,212)		(25,323)
Cash flows from financing activities:
Net repayments under revolving lines of credit	—		(65,189)

Payment of principal obligations under equipment notes	(24,409)		(30,441)
Payment of principal obligations under finance leases	(336)		(914)
Proceeds from exercise of stock options	483		306

Repurchase of common shares	(3,352)		(426)
Other financing activities	11		60
Net cash flows used in financing activities	(27,603)		(96,604)
Effect of exchange rate changes on cash	(62)		(150)
Net increase in cash and cash equivalents	50,338		6,549
Cash and cash equivalents:
Beginning of period	22,668		12,397
End of period	$	73,006	$	18,946

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.

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. Certain reclassifications were made to prior year amounts to conform to the current year presentation. 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").

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.

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For joint ventures in 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 and nine months ended September 30, 2021. Additionally, there have been no changes in ownership during the three and nine months ended September 30, 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, recorded in other income, net, for the nine months ended September 30, 2021 were $0.1 million. Foreign currency gains, recorded in other income, net, for the nine months ended September 30, 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.

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 September 30, 2021 and 2020, the Company had recognized revenues of $4.0 million and $19.1 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.

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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 September 30, 2021, changes in estimates pertaining to certain projects increased consolidated gross margin by 1.4%, which resulted in increases in operating income of $8.2 million, net income of $5.9 million and diluted earnings per common share of $0.35. During the nine months ended September 30, 2021, changes in estimates pertaining to certain projects increased consolidated gross margin by 0.4%, which resulted in increases in operating income of $7.2 million, net income of $5.2 million and diluted earnings per common share of $0.30.

During the three months ended September 30, 2020, changes in estimates pertaining to certain projects decreased consolidated gross margin by 0.3%, which resulted in decreases in operating income of $1.9 million, net income of $1.5 million and diluted earnings per common share of $0.09. During the nine months ended September 30, 2020, changes in estimates pertaining to certain projects decreased consolidated gross margin by 0.4%, which resulted in decreases in operating income of $7.6 million, net income of $5.5 million and diluted earnings per common share of $0.33.

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 September 30, 2021 and December 31, 2020.

Contract assets consisted of the following:


(in thousands)	September 30, 2021		December 31, 2020		Change

Unbilled revenue, net	$	132,599	$	97,543	$	35,056
Contract retainages, net	86,846		88,260		(1,414)
Contract assets, net	$	219,445	$	185,803	$	33,642

The Company’s consolidated balance sheets present contract liabilities which contain deferred revenue and an accrual for contracts in a loss provision.

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Contract liabilities consisted of the following:


(in thousands)	September 30, 2021		December 31, 2020		Change

Deferred revenue	$	146,604	$	155,570	$	(8,966)
Accrued loss provision	3,243		2,826		417
Contract liabilities	$	149,847	$	158,396	$	(8,549)

The following table provides information about contract assets and contract liabilities from contracts with customers:


(in thousands)	September 30, 2021		December 31, 2020		Change

Contract assets, net	$	219,445	$	185,803	$	33,642
Contract liabilities	(149,847)		(158,396)		8,549
Net contract assets (liabilities)	$	69,598	$	27,407	$	42,191

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 $13.8 million and $98.0 million for the three and nine months ended September 30, 2021, respectively. The amounts of revenue recognized in the period that were included in the opening contract liability balances were $31.3 million and $57.7 million for the three and nine months ended September 30, 2020, respectively. 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)	September 30, 2021		December 31, 2020

Costs and estimated earnings on uncompleted contracts	$	3,969,565	$	3,921,376
Less: billings to date	3,983,570		3,979,403
	$	(14,005)	$	(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)	September 30, 2021		December 31, 2020

Unbilled revenue	$	132,599	$	97,543
Deferred revenue	(146,604)		(155,570)
	$	(14,005)	$	(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 September 30, 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:


		September 30, 2021		December 31, 2020
(in thousands)	Classification on the Consolidated Balance Sheet
Assets
Operating lease right-of-use assets	Operating lease right-of-use assets	$	21,447	$	22,291
Finance lease right-of-use assets	Property and equipment, net of accumulated depreciation	—		390
Total right-of-use lease assets		$	21,447	$	22,681

Liabilities
Current
Operating lease obligations	Current portion of operating lease obligations	$	7,451	$	6,612
Finance lease obligations	Current portion of finance lease obligations	—		318
Total current obligations		7,451		6,930
Non-current
Operating lease obligations	Operating lease obligations, net of current maturities	14,015		15,730

Total non-current obligations		14,015		15,730
Total lease obligations		$	21,466	$	22,660

The following is a summary of the lease terms and discount rates:


	September 30, 2021		December 31, 2020
Weighted-average remaining lease term - finance leases	zero years		0.4 years
Weighted-average remaining lease term - operating leases	3.0 years		3.4 years
Weighted-average discount rate - finance leases	—	%	2.6	%
Weighted-average discount rate - operating leases	3.9	%	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 September 30,				Nine months ended September 30,
	2021		2020		2021		2020
Lease cost:
Finance lease cost:
Amortization of right-of-use assets	$	11	$	240	$	386	$	737
Interest on lease liabilities	—		7		—		27
Operating lease cost	2,515		2,327		7,474		6,875

Variable lease costs	78		106		233		259
Total lease cost	$	2,604	$	2,680	$	8,093	$	7,898

The following is a summary of other information and supplemental cash flow information related to finance and operating leases:


	Nine months ended September 30,
(in thousands)	2021		2020
Other information:
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	7,635	$	6,676
Right-of-use asset obtained in exchange for new operating lease obligations	$	5,687	$	5,592

The future undiscounted minimum lease payments, as reconciled to the discounted minimum lease obligation indicated on the Company’s consolidated balance sheets under operating leases, less imputed interest, as of September 30, 2021 were as follows:


(in thousands)	Operating Lease Obligations

Remainder of 2021	$	2,642
2022	9,430
2023	6,953
2024	3,847
2025	1,685
2026	977
Thereafter	10
Total minimum lease payments	25,544
Financing component	(4,078)
Net present value of minimum lease payments	21,466
Less: current portion of finance and operating lease obligations	(7,451)
Long-term finance and operating lease obligations	$	14,015