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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 June 30, 2023
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.)
12121 Grant Street,
Suite 610
Thornton,CO80241
(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
x
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 July 21, 2023, there were 16,709,534 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 I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS
MYR GROUP INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)June 30,
2023
December 31,
2022
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents$22,850 $51,040 
Accounts receivable, net of allowances of $2,106 and $2,073, respectively
474,984 472,543 
Contract assets, net of allowances of $601 and $499, respectively
382,406 300,615 
Current portion of receivable for insurance claims in excess of deductibles9,056 9,325 
Refundable income taxes11,262 8,944 
Prepaid expenses and other current assets39,643 47,824 
Total current assets940,201 890,291 
Property and equipment, net of accumulated depreciation of $363,112 and $351,753, respectively
247,479 233,175 
Operating lease right-of-use assets28,500 30,544 
Goodwill116,976 115,847 
Intangible assets, net of accumulated amortization of $28,061 and $25,439, respectively
86,013 87,557 
Receivable for insurance claims in excess of deductibles34,020 34,210 
Investment in joint ventures5,933 3,697 
Other assets5,681 3,537 
Total assets$1,464,803 $1,398,858 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt$5,175 $5,074 
Current portion of operating lease obligations9,835 9,711 
Current portion of finance lease obligations2,349 1,127 
Accounts payable337,699 315,323 
Contract liabilities228,818 227,055 
Current portion of accrued self-insurance26,537 28,752 
Other current liabilities74,147 79,918 
Total current liabilities684,560 666,960 
Deferred income tax liabilities46,141 45,775 
Long-term debt39,950 35,479 
Accrued self-insurance51,548 51,287 
Operating lease obligations, net of current maturities18,635 20,845 
Finance lease obligations, net of current maturities575 2,313 
Other liabilities19,094 15,999 
Total liabilities860,503 838,658 
Commitments and contingencies
Shareholders’ equity:
Preferred stock—$0.01 par value per share; 4,000,000 authorized shares; none issued and outstanding at June 30, 2023 and December 31, 2022
  
Common stock—$0.01 par value per share; 100,000,000 authorized shares; 16,709,534 and 16,563,767 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively
167 165 
Additional paid-in capital158,555 161,427 
Accumulated other comprehensive loss(4,024)(6,300)
Retained earnings449,602 404,908 
Total shareholders’ equity604,300 560,200 
Total liabilities and shareholders’ equity$1,464,803 $1,398,858 
The accompanying notes are an integral part of these consolidated financial statements.
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Table of Contents
MYR GROUP INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
Three months ended
June 30,
Six months ended
June 30,
(in thousands, except per share data)2023202220232022
Contract revenues$888,616 $708,114 $1,700,232 $1,344,738 
Contract costs798,489 627,252 1,525,713 1,183,391 
Gross profit90,127 80,862 174,519 161,347 
Selling, general and administrative expenses57,775 52,016 114,739 105,580 
Amortization of intangible assets1,229 3,253 2,455 6,020 
Gain on sale of property and equipment(1,315)(652)(2,539)(1,400)
Income from operations32,438 26,245 59,864 51,147 
Other income (expense):
Interest income193 6 514 14 
Interest expense(1,154)(650)(1,740)(1,101)
Other income, net120 2,277 30 2,262 
Income before provision for income taxes31,597 27,878 58,668 52,322 
Income tax expense9,324 8,194 13,232 11,950 
Net income$22,273 $19,684 $45,436 $40,372 
Income per common share:
—Basic$1.33 $1.17 $2.73 $2.39 
—Diluted$1.33 $1.15 $2.70 $2.36 
Weighted average number of common shares and potential common shares outstanding:
—Basic16,707 16,894 16,662 16,904 
—Diluted16,809 17,070 16,817 17,141 
Net income$22,273 $19,684 $45,436 $40,372 
Other comprehensive income (loss):
Foreign currency translation adjustment2,140 (3,477)2,276 (1,826)
Other comprehensive income (loss)2,140 (3,477)2,276 (1,826)
Total comprehensive income$24,413 $16,207 $47,712 $38,546 
The accompanying notes are an integral part of these consolidated financial statements.
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Table of Contents
MYR GROUP INC.
UNAUDITED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

PreferredCommon StockAdditional
Paid-In
Accumulated
Other
Comprehensive
Retained
(in thousands)StockSharesAmountCapitalIncome (Loss)EarningsTotal
Balance at December 31, 2021$ 16,871 $168 $163,754 $173 $355,007 $519,102 
Net income— — — — — 20,688 20,688 
Stock issued under compensation plans, net— 193 2 2 — — 4 
Stock-based compensation expense— — — 1,624 — — 1,624 
Shares repurchased related to tax withholding for stock-based compensation— (69)— (6,124)— (667)(6,791)
Other comprehensive income— — — — 1,651 — 1,651 
Balance at March 31, 2022 16,995 170 159,256 1,824 375,028 536,278 
Net income— — — — — 19,684 19,684 
Stock issued under compensation plans, net— 9 — — — —  
Stock-based compensation expense — — — 2,064 — — 2,064 
Shares repurchased related to tax withholding for stock-based compensation— (280)(3)(2,629)— (20,835)(23,467)
Other comprehensive loss— — — — (3,477)— (3,477)
Balance at June 30, 2022$ 16,724 $167 $158,691 $(1,653)$373,877 $531,082 
Balance at December 31, 2022$ 16,564 $165 $161,427 $(6,300)$404,908 $560,200 
Net income— — — — — 23,163 23,163 
Stock issued under compensation plans, net— 211 2 18 — — 20 
Stock-based compensation expense— — — 1,982 — — 1,982 
Shares repurchased related to tax withholding for stock-based compensation— (76)— (7,194)— (742)(7,936)
Other comprehensive income— — — — 136 — 136 
Balance at March 31, 2023 16,699 167 156,233 (6,164)427,329 577,565 
Net income— — — — — 22,273 22,273 
Stock issued under compensation plans, net— 11 — — — —  
Stock-based compensation expense — — — 2,322 — — 2,322 
Other comprehensive income— — — — 2,140 — 2,140 
Balance at June 30, 2023$ 16,710 $167 $158,555 $(4,024)$449,602 $604,300 
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
Six months ended
June 30,
(in thousands)20232022
Cash flows from operating activities:
Net income$45,436 $40,372 
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation and amortization of property and equipment26,040 24,043 
Amortization of intangible assets2,455 6,020 
Stock-based compensation expense4,304 3,688 
Deferred income taxes (1)
Gain on sale of property and equipment(2,539)(1,400)
Other non-cash items(221)581 
Changes in operating assets and liabilities, net of acquisition:
Accounts receivable, net(1,714)(20,457)
Contract assets, net(81,243)(43,413)
Receivable for insurance claims in excess of deductibles459 12,504 
Other assets3,147 (4,939)
Accounts payable23,004 42,763 
Contract liabilities1,468 33,619 
Accrued self-insurance(1,962)(11,861)
Other liabilities(2,790)(21,400)
Net cash flows provided by operating activities15,844 60,119 
Cash flows from investing activities:
Proceeds from sale of property and equipment3,331 1,237 
Cash paid for acquired business, net of cash acquired (110,576)
Purchases of property and equipment(41,730)(30,421)
Net cash flows used in investing activities(38,399)(139,760)
Cash flows from financing activities:
Borrowings under revolving lines of credit185,330 121,533 
Repayments under revolving lines of credit(178,247)(70,138)
Payment of principal obligations under equipment notes(2,512)(516)
Payment of principal obligations under finance leases(584)(880)
Proceeds from exercise of stock options20 4 
Repurchase of common stock (23,467)
Debt refinancing costs(2,120) 
Payments related to tax withholding for stock-based compensation(7,936)(6,791)
Other financing activities 607 
Net cash flows provided by (used in) financing activities(6,049)20,352 
Effect of exchange rate changes on cash414 (746)
Net decrease in cash and cash equivalents(28,190)(60,035)
Cash and cash equivalents:
Beginning of period51,040 82,092 
End of period$22,850 $22,057 
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. 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 on electric transmission, distribution networks, substation facilities, clean energy projects and electric vehicle charging infrastructure. T&D services include design, engineering, procurement, construction, upgrade, maintenance and repair services. 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. Typical C&I contracts cover electrical contracting services for airports, hospitals, data centers, hotels, stadiums, commercial and industrial facilities, clean energy projects, manufacturing plants, processing facilities, water/waste-water treatment facilities, mining facilities, intelligent transportation systems, roadway lighting, signalization and electric vehicle charging infrastructure.
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, shareholders’ 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, 2022 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, 2022, included in the Company’s Annual Report on Form 10-K, which was filed with the SEC on February 22, 2023 (the "2022 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. As of June 30, 2023, the Company did not have a controlling interest in any current joint venture partnerships. 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.
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 (loss) in shareholders’ equity. Foreign currency transaction gains and losses, arising primarily from changes in exchange rates on short-term monetary assets and liabilities, and intercompany loans that are not deemed long-term investment accounts are recorded in the “other income, net” line on the Company’s consolidated statements of operations. Foreign currency gains, recorded in other income, net, for the six months ended June 30, 2023 and 2022 were not significant. Foreign currency translation gains and losses, arising from intercompany loans that are deemed long-term investment accounts, 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, acquisition-related contingent earn-out consideration liabilities, 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 June 30, 2023 and December 31, 2022, the Company had recognized revenues of $38.1 million and $19.6 million, respectively, related to large 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 June 30, 2023, changes in estimates pertaining to certain projects decreased consolidated gross margin by 1.3%, which resulted in decreases in operating income of $11.5 million, net income of $8.0 million and diluted earnings per common share of $0.48. During the six months ended June 30, 2023, changes in estimates pertaining to certain projects decreased consolidated gross margin by 1.0% and resulted in decreases in operating income of $17.8 million, net income of $12.4 million and diluted earnings per common share of $0.74. Additional discussion on the impact of these estimate changes can be found in Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Consolidated Results of Operations.”
During the three months ended June 30, 2022, changes in estimates pertaining to certain projects decreased consolidated gross margin by 0.1%, which resulted in decreases in operating income of $0.5 million, net income of $0.3 million and diluted earnings per common share of $0.02. During the six months ended June 30, 2022, changes in estimates pertaining to certain projects increased consolidated gross margin by 0.3%, which resulted in increases in operating income of $3.7 million, net income of $2.5 million and diluted earnings per common share of $0.15.
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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 are either not applicable to the Company or will have minimal impact on its consolidated financial statements when adopted.
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 $0.6 million as of June 30, 2023 and $0.5 million as of December 31, 2022.
Contract assets consisted of the following:
(in thousands)June 30,
2023
December 31,
2022
Change
Unbilled revenue, net$210,466 $156,266 $54,200 
Contract retainages, net171,940 144,349 27,591 
Contract assets, net$382,406 $300,615 $81,791 
The Company’s consolidated balance sheets present contract liabilities that contain deferred revenue and an accrual for contracts in a loss provision.
Contract liabilities consisted of the following:
(in thousands)June 30,
2023
December 31,
2022
Change
Deferred revenue$225,842 $223,654 $2,188 
Accrued loss provision2,976 3,401 (425)
Contract liabilities$228,818 $227,055 $1,763 
The following table provides information about contract assets and contract liabilities from contracts with customers:
(in thousands)June 30,
2023
December 31,
2022
Change
Contract assets, net$382,406 $300,615 $81,791 
Contract liabilities(228,818)(227,055)(1,763)
Net contract assets$153,588 $73,560 $80,028 
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 $17.3 million and $107.0 million for the three and six months ended June 30, 2023, respectively. The amounts of revenue recognized in the period that were included in the opening contract liability balances were $25.8 million and $58.6 million for the three and six months ended June 30, 2022, respectively.
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The net asset position for contracts in process consisted of the following:
(in thousands)June 30,
2023
December 31,
2022
Costs and estimated earnings on uncompleted contracts$5,713,213 $5,390,535 
Less: billings to date5,728,589 5,457,923 
$(15,376)$(67,388)
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)June 30,
2023
December 31,
2022
Unbilled revenue $210,466 $156,266 
Deferred revenue (225,842)(223,654)
$(15,376)$(67,388)

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 June 30, 2023, 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 ongoing 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:
June 30,
2023
December 31,
2022
(in thousands)Classification on the Consolidated Balance Sheet
Assets
Operating lease right-of-use assetsOperating lease right-of-use assets$28,500 $30,544 
Finance lease right-of-use assetsProperty and equipment, net of accumulated depreciation2,741 3,238 
Total right-of-use lease assets$31,241 $33,782 
Liabilities
Current
Operating lease obligationsCurrent portion of operating lease obligations$9,835 $9,711 
Finance lease obligationsCurrent portion of finance lease obligations2,349 1,127 
Total current obligations12,184 10,838 
Non-current
Operating lease obligationsOperating lease obligations, net of current maturities18,635 20,845 
Finance lease obligationsFinance lease obligations, net of current maturities575 2,313 
Total non-current obligations19,210 23,158 
Total lease obligations$31,394 $33,996 
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The following is a summary of the lease terms and discount rates:
June 30,
2023
December 31,
2022
Weighted-average remaining lease term - finance leases1.4 years1.9 years
Weighted-average remaining lease term - operating leases3.4 years3.6 years
Weighted-average discount rate - finance leases3.0 %3.0 %
Weighted-average discount rate - operating leases3.9 %3.8 %
The following is a summary of certain information related to the lease costs for finance and operating leases:
(in thousands)Three months ended
June 30,
Six months ended
June 30,
2023202220232022
Lease cost:
Finance lease cost:
Amortization of right-of-use assets$80 $218 $1,416 $656 
Interest on lease liabilities22 47 45 75 
Operating lease cost3,558 3,265 7,148 6,388 
Variable lease costs83 102 172 211 
Total lease cost$3,743 $3,632 $8,781 $7,330 
The following is a summary of other information and supplemental cash flow information related to finance and operating leases:
Six months ended June 30,
(in thousands)20232022
Other information:
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases$7,259 $6,355 
Right-of-use asset obtained in exchange for new operating lease obligations$3,366 $17,647 
Right-of-use asset obtained in exchange for new finance lease obligations$ $543 
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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 June 30, 2023 were as follows:
(in thousands)Finance
Lease Obligations
Operating Lease
Obligations
Total
Lease
Obligations
Remainder of 2023
$598 $6,835 $7,433 
20242,087 10,427 12,514 
2025323 7,693 8,016 
2026 5,772 5,772 
2027 1,752 1,752 
2028 1,162 1,162 
Thereafter 1,810 1,810 
Total minimum lease payments3,008 35,451 38,459 
Financing component(84)(6,981)(7,065)
Net present value of minimum lease payments2,924 28,470 31,394 
Less: current portion of finance and operating lease obligations(2,349)(9,835)(12,184)
Long-term finance and operating lease obligations$575 $18,635 $19,210 
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 or below market rental rates. As of June 30, 2023, the minimum lease payments required under these leases totaled $5.9 million, which are due over the next 3.5 years.
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 June 30, 2023 and December 31, 2022, the Company determined that the carrying value of cash and cash equivalents approximated fair value based on Level 1 inputs. As of June 30, 2023 and December 31, 2022, the fair value of the Company’s long-term debt and finance lease obligations was based on Level 2 inputs. The Company’s long-term debt was based on variable and fixed interest rates at June 30, 2023 and December 31, 2022, 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 value of the Company’s finance lease obligations also approximated fair value.
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As of June 30, 2023, the fair value of the Company’s contingent earn-out consideration liability associated with the acquisition of Powerline Plus Ltd. and its affiliate PLP Redimix Ltd. (collectively, the “Powerline Plus Companies") was based on Level 3 inputs. The contingent earn-out consideration recorded represents the estimated fair value of future amounts potentially payable to the former owners of the acquired Powerline Plus Companies and was initially determined using a Monte Carlo simulation valuation methodology based on probability-weighted performance projections and other inputs, including a discount rate and an expected volatility factor. The fair value of this contingent earn-out consideration liability will be evaluated on an ongoing basis by management. Accordingly, the level of inputs used for these fair value measurements is the lowest level (Level 3). Significant changes in any of these assumptions could result in a significantly higher or lower potential liability. As of the acquisition date, the fair value of the contingent earn-out consideration was $0.9 million. As of June 30, 2023 and December 31, 2022, the fair value of the contingent earn-out consideration was $0.2 million. The future payout of the contingent earn-out consideration, if any, is unlimited and could be significantly higher than the acquisition date fair value. If the minimum thresholds of the performance targets are achieved the contingent earn-out consideration payment will be approximately $17.0 million. There were no changes in contingent earn-out consideration during the three and six months ended June 30, 2023 and 2022. Any changes in contingent earn-out consideration are recorded in other income.
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
June 30, 2023
Outstanding
Balance as of
December 31, 2022
Credit Agreement
Revolving loans5/31/2023VariableVariable5$19,999 $12,915 
Equipment Notes
Equipment Note 812/27/20192.75%Semi-annual52,933 3,464 
Equipment Note 108/26/20224.32%Semi-annual522,142 24,119 
Other equipment note4/11/20224.55%Monthly551 55 
25,126 27,638 
Total debt45,125 40,553 
Less: current portion of long-term debt(5,175)(5,074)
Long-term debt$39,950 $35,479 
Credit Agreement
On May 31, 2023, the Company entered into a five-year third 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 $490 million revolving credit facility (the “Facility”), subject to certain financial covenants as defined in the Credit Agreement. The Facility allows for revolving loans in Canadian dollars and other non-US currencies, up to the U.S. dollar equivalent of $150 million. Of the Facility, up to $75 million may be used for letters of credit, with an additional $75 million available for letters of credit, subject to the sole discretion of each issuing bank. The Facility also allows for $15 million to be used for swingline loans. 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. The Credit Agreement provides for customary events of default. 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 to refinance existing indebtedness, and to provide for future working capital, capital expenditures, acquisitions 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 0.25% to 1.00%; or (2)  the Term Benchmark Rate (as defined in the Credit Agreement) plus an applicable margin ranging from 1.25% to 2.00%. The applicable margin is determined based on the Company’s Net Leverage Ratio (as defined in the Credit Agreement). The Credit Agreement establishes Adjusted Term Secured Overnight Financing Rate (“SOFR”) (as defined in the Credit Agreement) as the benchmark rate, in replacement of LIBOR. Letters of credit issued under the Facility are subject to a letter of credit fee of 1.25% to 2.00% for non-performance letters of credit or 0.625% to 1.00% for performance letters of credit, based on the Company’s Net Leverage Ratio. The Company is subject to a commitment fee of 0.20% to 0.30%, based on the Company’s Net Leverage Ratio, on any unused portion of the Facility. The Credit Agreement restricts certain types of payments when the Company’s Net Leverage Ratio, after giving pro forma effect thereto, exceeds 2.75. The weighted average interest rate on borrowings outstanding on the Facility for the six months ended June 30, 2023 was 6.88% per annum.
Under the Credit Agreement, the Company is subject to certain financial covenants including a maximum Net Leverage Ratio of 3.0 and a minimum Interest Coverage Ratio (as defined in the Credit Agreement) of 3.0. 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 June 30, 2023.
As of June 30, 2023, the Company had $20.0 million of borrowings outstanding under the Facility and letters of credit outstanding under the Facility of approximately $19.0 million, including $11.7 million related to the Company's payment obligation under its insurance programs and approximately $7.3 million related to contract performance obligations.
As of December 31, 2022, the Company had $12.9 million of borrowings outstanding under the revolving credit facility under its previous credit agreement and letters of credit outstanding under the revolving credit facility under its previous credit agreement of approximately $12.8 million, which were almost entirely related to the Company's payment obligation under its insurance programs.
The Company had remaining deferred debt issuance costs totaling $2.5 million as of June 30, 2023, 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. Unamortized deferred debt issuance costs totaling $0.4 million relating to our previous credit agreement will be amortized over the life of the Facility.
Equipment Notes
The Company has entered into Master Equipment Loan and Security Agreements (the “Master Loan Agreements”) with multiple finance companies. The Master Loan Agreements may be used for the financing of equipment between the Company and the lenders 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.
As of June 30, 2023, the Company had two Equipment Notes outstanding under the Master Loan Agreements that are collateralized by equipment and vehicles owned by the Company. As of June 30, 2023, the Company had one other equipment note outstanding that is collateralized by a vehicle owned by the Company. The following table sets forth our remaining principal payments for all of the Company’s outstanding equipment notes as of June 30, 2023:
(in thousands)Future
Equipment Notes
Principal Payments
Remainder of 2023
$2,563 
20246,578 
20254,364 
20264,555 
20277,066 
2028 
Total future principal payments25,126 
Less: current portion of equipment notes(5,175)
Long-term principal obligations$19,951 
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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.
The components of the Company’s revenue by contract type for the three months ended June 30, 2023 and 2022 were as follows:
Three months ended June 30, 2023
T&DC&ITotal
(dollars in thousands)AmountPercentAmountPercentAmountPercent
Fixed price$261,348 51.9 %$313,409 81.4 %$574,757 64.7 %
Unit price139,92927.8 23,5586.1 163,48718.4 
T&E102,460 20.3 47,912 12.5 150,372 16.9 
$503,737 100.0 %$384,879 100.0 %$888,616 100.0 %
Three months ended June 30, 2022
T&DC&ITotal
(dollars in thousands)AmountPercentAmountPercentAmountPercent
Fixed price$192,934 46.5 %$243,682 83.2 %$436,616 61.7 %
Unit price117,609 28.3 17,932 6.1 135,541 19.1 
T&E104,692 25.2 31,265 10.7 135,957 19.2 
$415,235 100.0 %$292,879 100.0 %$708,114 100.0 %
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The components of the Company’s revenue by contract type for the six months ended June 30, 2023 and 2022 were as follows:
Six months ended June 30, 2023
T&DC&ITotal
(dollars in thousands)AmountPercentAmountPercentAmountPercent
Fixed price$490,582 51.7 %$619,030 82.4 %$1,109,612 65.3 %
Unit price253,637 26.7 41,200 5.5 294,837 17.3 
T&E204,841 21.6 90,942 12.1 295,783 17.4 
$949,060 100.0 %$751,172 100.0 %$1,700,232 100.0 %
Six months ended June 30, 2022
T&DC&ITotal
(dollars in thousands)AmountPercentAmountPercentAmountPercent
Fixed price$343,838 44.1 %$462,259 81.9 %$806,097 59.9 %
Unit price221,930 28.4 32,735 5.8 254,665 19.0 
T&E214,323 27.5 69,653 12.3 283,976 21.1 
$780,091 100.0 %$564,647 100.0 %$1,344,738 100.0 %
The components of the Company’s revenue by market type for the three months ended June 30, 2023 and 2022 were as follows:
Three months ended June 30, 2023Three months ended June 30, 2022
(dollars in thousands)AmountPercentSegmentAmountPercentSegment
Transmission
$322,272 36.3 %T&D$250,078 35.3 %T&D
Distribution
181,465 20.4 T&D165,157 23.3 T&D
Electrical construction
384,879 43.3 C&I292,879 41.4 C&I
Total revenue$888,616 100.0 %$708,114 100.0 %
The components of the Company’s revenue by market type for the six months ended June 30, 2023 and 2022 were as follows:
Six months ended June 30, 2023Six months ended June 30, 2022
(dollars in thousands)AmountPercentSegmentAmountPercentSegment
Transmission$620,370 36.5 %T&D$471,685 35.1 %T&D
Distribution328,690 19.3 T&D308,406 22.9 T&D
Electrical construction751,172 44.2 C&I564,647 42.0 C&I
Total revenue$1,700,232 100.0 %$1,344,738 100.0 %
Remaining Performance Obligations
As of June 30, 2023, the Company had $2.54 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.
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The following table summarizes the amount of remaining performance obligations as of June 30, 2023 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 June 30, 2023
(in thousands)TotalAmount estimated to not be
recognized within 12 months
Total at December 31, 2022
T&D$1,004,670 $81,156 $898,617 
C&I1,537,060 387,745 1,428,257 
Total$2,541,730 $468,901 $2,326,874 
The Company expects the 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 and six months ended June 30, 2023 and 2022. The Company’s effective tax rate for the three and six months ended June 30, 2023 was 29.5% and 22.6%, respectively, of pretax income compared to the effective tax rate for the three and six months ended June 30, 2022 of 29.4% and 22.8%, respectively.
The difference between the U.S. federal statutory tax rate and the Company’s effective tax rate for the three months ended June 30, 2023 and June 30, 2022, was primarily due to state income taxes, Canadian taxes and other permanent difference items.
The difference between the U.S. federal statutory tax rate and the Company’s effective tax rate for the six months ended June 30, 2023 and June 30, 2022, was primarily due to state income taxes, Canadian taxes and other permanent difference items partially offset by a favorable impact from stock compensation excess tax benefits.
The Company had unrecognized tax benefits of approximately $0.5 million as of June 30, 2023 and December 31, 2022, 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 and six months ended June 30, 2023 and 2022.
The Company is subject to taxation in various jurisdictions. The Company’s 2019 through 2021 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 2018 through 2021.
8. Commitments and Contingencies
Purchase Commitments
As of June 30, 2023, the Company had approximately $24.7 million in outstanding purchase orders for certain construction equipment, with cash payments scheduled to occur in 2023 and 2024.
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Insurance and Claims Accruals
The Company carries insurance policies, which are subject to certain deductibles and limits, 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.
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 June 30, 2023, an aggregate of approximately $2.14 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 $765.0 million as of June 30, 2023.
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, 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 specified wages, provide certain benefits and contribute certain amounts to multi-employer pension plans. If a subsidiary withdraws from any of the multi-employer pension plans or if the plans were to otherwise become underfunded, the subsidiary could incur liabilities for additional contributions related to these plans. Although the Company has been informed that the status of some multi-employer pension plans to which its subsidiaries contribute have been classified as “critical”, the Company is not currently aware of any potential liabilities related to this issue.
Litigation and Other Legal Matters
The Company is from time to time party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of business. These actions typically seek, among other things, compensation for alleged personal injury, breach of contract, property damages, punitive damages, civil penalties or other losses, or injunctive or declaratory relief.
The Company is routinely subject to other civil claims, litigation and arbitration, and regulatory investigations arising in the ordinary course of our present business. These claims, lawsuits and other proceedings include claims related to the Company’s current services and operations, as well as our historic operations.
With respect to all such lawsuits, claims and proceedings, the Company records reserves when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. The Company does not believe that any of these proceedings, separately or in the aggregate, would be expected to have a material adverse effect on the Company’s financial condition, results of operations or cash flows.
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9. Stock-Based Compensation
The Company maintains two equity compensation plans under which stock-based compensation has been granted: the 2017 Long-Term Incentive Plan (Amended and Restated as of April 23, 2020) (the “LTIP”) and the 2007 Long-Term Incentive Plan (Amended and Restated as of May 1, 2014) (the “2007 LTIP”). Upon the initial adoption of the LTIP in 2017, awards were no longer granted under the 2007 LTIP. The LTIP was approved by our shareholders and provides for grants of (a) incentive stock options qualified as such under U.S. federal income tax laws, (b) stock options that do not qualify as incentive stock options, (c) stock appreciation rights, (d) restricted stock awards, (e) restricted stock units, (f) performance awards, (g) phantom stock, (h) stock bonuses, (i) dividend equivalents, or (j) any combination of such grants. The Company has outstanding grants of non-qualified stock options, time-vested stock awards in the form of restricted stock units and internal metric-based and market-based performance stock units.
During the six months ended June 30, 2023, the Company granted time-vested stock awards covering 51,167 shares of common stock under the LTIP, which vest ratably over three years for employee awards and after one year for non-employee director awards, at a weighted average grant date fair value of $117.60. During the six months ended June 30, 2023, time-vested stock awards covering 63,722 shares of common stock vested at a weighted average grant date fair value of $59.71.
During the six months ended June 30, 2023, the Company granted 32,994 performance share awards under the LTIP at target, which will cliff vest, if earned, on December 31, 2025, at a weighted average grant date fair value of $136.54. The number of shares ultimately earned under a performance award may vary from zero to 200% of the target shares granted, based upon the Company’s performance compared to certain metrics. The metrics used were determined at the time of the grant by the Compensation Committee of the Board of Directors and were either based on internal measures, such as the Company’s financial performance compared to targets, or on a market-based metric, such as the Company’s stock performance compared to a peer group. Performance awards granted cliff vest following the performance period if the stated performance targets and minimum service requirements are attained and are paid in shares of the Company’s common stock.
During the six months ended June 30, 2023, plan participants exercised options to purchase 827 shares of the Company’s common stock with a weighted average exercise price of $24.68. During the six months ended June 30, 2023, 42 options expired. On March 25, 2023, the Company's final outstanding and exercisable options expired and the Company had no remaining awards outstanding under the 2007 LTIP.
The Company recognizes stock-based compensation expense related to restricted stock units based on the grant date fair value, which was the closing price of the Company’s stock on the date of grant. The fair value is expensed over the service period, which is generally three years.
For performance awards, the Company recognizes stock-based compensation expense based on the grant date fair value of the award. The fair value of internal metric-based performance awards is determined by the closing stock price of the Company’s common stock on the date of the grant. The fair value of market-based performance awards is computed using a Monte Carlo simulation. Performance awards are expensed over the service period of approximately 2.8 years, and the Company adjusts the stock-based compensation expense related to internal metric-based performance awards according to its determination of the shares expected to vest at each reporting date.
10. Segment Information
MYR Group is a holding company of specialty contractors serving electrical utility infrastructure and commercial construction markets in the United States and Canada. The Company has two reporting segments, each a separate operating segment, which are referred to as T&D and C&I. Performance measurement and resource allocation for the reporting segments are based on many factors. The primary financial measures used to evaluate the segment information are contract revenues and income from operations, excluding general corporate expenses. General corporate expenses include corporate facility and staffing costs, which include safety costs, professional fees, IT expenses and management fees. The accounting policies of the segments are the same as those described in the Note 1–Organization, Business and Significant Accounting Policies to the 2022 Annual Report.
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Transmission and Distribution: The T&D segment provides a broad range of services on electric transmission and distribution networks and substation facilities which include design, engineering, procurement, construction, upgrade, maintenance and repair services with a particular focus on construction, maintenance and repair. T&D services include the construction and maintenance of high voltage transmission lines, substations and lower voltage underground and overhead distribution systems, clean energy projects and electric vehicle charging infrastructure. The T&D segment also provides emergency restoration services in response to hurricane, wildfire, ice or other damage. 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.
Commercial and Industrial: The C&I segment provides services such as the design, installation, maintenance and repair of commercial and industrial wiring, the installation of intelligent transportation systems, roadway lighting, signalization and electric vehicle charging infrastructure. Typical C&I contracts cover electrical contracting services for airports, hospitals, data centers, hotels, stadiums, commercial and industrial facilities, clean energy projects, manufacturing plants, processing facilities, water/waste-water treatment facilities, mining facilities and transportation control and management systems. The C&I segment generally provides electric construction and maintenance services as a subcontractor to general contractors in the C&I industry, but also contracts directly with facility owners. The C&I segment has a diverse customer base with many long-standing relationships.
The information in the following table is derived from the segment’s internal financial reports used for corporate management purposes:
Three months ended
June 30,
Six months ended
June 30,
(in thousands)2023202220232022
Contract revenues:
T&D$503,737 $415,235 $949,060 $780,091 
C&I384,879292,879751,172564,647
$888,616 $708,114 $1,700,232 $1,344,738 
Income from operations:
T&D$37,734 $32,810 $70,554 $63,240 
C&I12,623 9,512 23,250 19,602 
General Corporate(17,919)(16,077)(33,940)(31,695)
$32,438 $26,245 $59,864 $51,147 
11. Earnings Per Share
The Company computes earnings per share using the treasury stock method. Under the treasury stock method, basic earnings per share are computed by dividing net income available to shareholders by the weighted average number of common shares outstanding during the period, and diluted earnings per share are computed by dividing net income available to shareholders by the weighted average number of common shares outstanding during the period plus all potentially dilutive common stock equivalents, except in cases where the effect of the common stock equivalent would be anti-dilutive.
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Net income and the weighted average number of common shares used to compute basic and diluted earnings per share were as follows:
Three months ended
June 30,
Six months ended
June 30,
(in thousands, except per share data)2023202220232022
Numerator:
Net income$22,273 $19,684 $45,436 $40,372 
Denominator:
Weighted average common shares outstanding16,707 16,894 16,662 16,904 
Weighted average dilutive securities102176155237
Weighted average common shares outstanding, diluted16,809 17,070 16,817 17,141 
Income per common share:
Basic$1.33 $1.17 $2.73 $2.39 
Diluted$1.33 $1.15 $2.70 $2.36 
For the three and six months ended June 30, 2023 and 2022, certain common stock equivalents were excluded from the calculation of dilutive securities because their inclusion would have been anti-dilutive. All of the Company’s unvested time-vested stock awards were included in the computation of weighted average dilutive securities.
The following table summarizes the shares of common stock underlying the Company’s unvested time-vested stock awards and performance awards that were excluded from the calculation of dilutive securities:
Three months ended
June 30,
Six months ended
June 30,
(in thousands)2023202220232022
Time-vested stock awards 35  35 
Performance awards14 32 14 32 
Share Repurchases
During the six months ended June 30, 2023 the Company repurchased 76,150 shares of stock, for approximately $7.9 million, from its employees to satisfy tax obligations on shares vested under the LTIP. During the six months ended June 30, 2022 the Company repurchased 68,675 shares of stock, for approximately $6.8 million, from its employees to satisfy tax obligations on shares vested under the LTIP.
On May 2, 2023, the Company announced that its Board of Directors had authorized a new $75.0 million share repurchase program (the "Repurchase Program"), which became effective on May 9, 2023. The Repurchase Program will expire on November 8, 2023, or when the authorized funds are exhausted, whichever is earlier. During the six months ended June 30, 2023, the Company had no repurchases of its common stock under the Repurchase Program or the prior repurchase program. During the six months ended June 30, 2022, the Company repurchased 280,907 shares of its common stock under a prior repurchase program at a weighted-average price of $83.54 per share. As of June 30, 2023, the Company had $75.0 million of remaining availability to repurchase shares of the Company’s common stock under the Repurchase Program.
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ITEM 2.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This management’s discussion and analysis provides a narrative on the Company’s financial performance and condition that should be read in conjunction with the accompanying unaudited consolidated financial statements and with our Annual Report on Form 10-K for the year ended December 31, 2022 (the “2022 Annual Report”). In addition to historical information, this discussion contains forward-looking statements that involve risks, uncertainties and assumptions that could cause actual results to differ materially from management’s expectations. Factors that could cause such differences are discussed herein under the captions “Cautionary Statement Concerning Forward-Looking Statements and Information” and “Risk Factors,” as well as in the 2022 Annual Report. We assume no obligation to update any of these forward-looking statements.
Overview and Outlook
We are a holding company of specialty electrical construction service providers that was established in 1995 through the merger of long-standing specialty contractors. Through our subsidiaries, we serve the electric utility infrastructure, commercial and industrial construction markets. We manage and report our operations through two electrical contracting service segments: Transmission and Distribution (“T&D”) and Commercial and Industrial (“C&I”).
We have operated in the transmission and distribution industry since 1891. We are one of the largest U.S. contractors servicing the T&D sector of the electric utility industry and provide T&D services throughout the United States and in Ontario, Canada. Our T&D customers include many of the leading companies in the electric utility industry. We have provided electrical contracting services for commercial and industrial construction since 1912. Our C&I segment provides services in the United States and in western Canada. Our C&I customers include facility owners and general contractors.
We believe that we have a number of competitive advantages in both of our segments, including our skilled workforce, extensive centralized fleet, proven safety performance and reputation for timely completion of quality work that allows us to compete favorably in our markets. In addition, we believe that we are better capitalized than some of our competitors, which provides us with valuable flexibility to take on additional and more complex projects.
We believe legislative actions aimed at supporting infrastructure improvements in the United States may positively impact long-term demand, particularly in connection with electric power infrastructure, transportation and clean energy spending. We believe the legislative actions are likely to provide greater long-term opportunity in both of our reporting segments. However both of our segments and supporting operations may be subject to delays and cost volatility due to supply chain disruptions, inflationary pressures, tariffs and regulatory slowdowns, which may result in decelerations in project opportunities and awards.
We had consolidated revenues for the six months ended June 30, 2023 of $1.70 billion, of which 55.8% was attributable to our T&D customers and 44.2% was attributable to our C&I customers. Our consolidated revenues for the six months ended June 30, 2022 were $1.34 billion. For the six months ended June 30, 2023, our net income and EBITDA(1) were $45.4 million and $88.4 million, respectively, compared to $40.4 million and $83.5 million, respectively, for the six months ended June 30, 2022.
We believe there is an ongoing need for utilities to sustain investment in their transmission systems to improve reliability, reduce congestion and connect to new clean energy sources. Consequently, we believe that we will continue to see significant bidding activity on large transmission projects going forward. The timing of multi-year transmission project awards and substantial construction activity is difficult to predict due to regulatory requirements and the permitting needed to commence construction. Significant construction on any large, multi-year projects awarded in the remainder of 2023 will not likely have a large impact on 2023 results. Bidding and construction activity for small to medium-size transmission projects and upgrades remain active, and we expect this trend to continue.
We believe there is a need for further investment by utilities on their distribution systems to properly maintain or meet reliability requirements. We continue to see increased bidding activity in some of our electric distribution markets. We believe the increased storm activity and destruction caused by wildfires will cause a push to strengthen utility distribution systems against catastrophic damage. Distribution systems may also require upgrades to accommodate additional distributed energy resources and increased electrification. Several industry and market trends are also prompting customers in the electric utility industry to seek outsourcing partners rather than performing projects internally. These trends include an aging electric utility workforce, increasing costs and staffing constraints. We believe electric utility employee retirements could increase with further economic recovery, which may result in an increase in outsourcing opportunities. We expect to see an incremental increase in distribution opportunities in the markets we serve during the rest of 2023.
(1) EBITDA is a non-GAAP measure. Refer to “Non-GAAP Measure—EBITDA” for a discussion of this measure.
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Although our C&I bidding opportunities remain strong, we may see impacts due to continued market disruptions and overall market volatility which could result in slower growth of our C&I Segment. We believe that the primary markets we serve such as health care, transportation, data centers, warehousing, clean energy and water/waste-water projects, may be somewhat less vulnerable to an economic slowdown.
In addition, the United States has experienced decades of underfunded economic expansion and aging infrastructure that has challenged the capacity of public water and transportation infrastructure forcing states and municipalities to seek creative means to fund needed expansion and repair. We believe the need for expanding public infrastructure will offer opportunity in our C&I segment for several years. Legislation and regulation that promotes domestic manufacturing could also create opportunity for our C&I segment. We expect the long-term growth in our C&I segment to generally track the overall growth of the regions we serve.
We strive to maintain our status as a preferred provider to our T&D and C&I customers. We continue to implement strategies that are designed to further expand our capabilities and effectively allocate capital. We have focused on strengthening our balance sheet by maintaining a low level of variable rate outstanding debt in the current higher interest rate environment and increasing our revolving credit facility to $490 million. This expanded availability of liquidity will allow us to take advantage of future opportunities as they arise. Additionally, as of June 30, 2023, we had $75.0 million of remaining availability to purchase shares under our share repurchase program, which continues in effect until November 8, 2023, or until the authorized funds are exhausted.
We continue to manage our increasing operating costs, including increasing insurance, equipment, labor and material costs. We believe that our financial position, positive cash flows and other operational strengths will enable us to manage our markets and give us the flexibility to successfully execute our strategy. We continue to invest in developing key management and craft personnel in both our T&D and C&I segments and in procuring the specific specialty equipment and tooling needed to win and execute projects of all sizes and complexity.
Backlog
We refer to our estimated revenue on uncompleted contracts, including the amount of revenue on contracts for which work has not begun, less the revenue we have recognized under such contracts, as “backlog.” A customer’s intention to award us work under a fixed-price contract is not included in backlog unless there is an actual written award to perform a specific scope of work at specific terms and pricing. For many of our unit-price, time-and-equipment, time-and-materials and cost plus contracts, we only include projected revenue for a three-month period in the calculation of backlog, although these types of contracts are generally awarded as part of master service agreements that typically have a one-year to three-year duration from execution. Backlog may not accurately represent the revenues that we expect to realize during any particular period. Several factors, such as the timing of contract awards, the type and duration of contracts, and the mix of subcontractor and material costs in our projects, can impact our backlog at any point in time. Some of our revenue does not appear in our periodic backlog reporting because the award of the project, as well as the execution of the work, may all take place within the period. Our backlog includes 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. Backlog should not be relied upon as a stand-alone indicator of future events.
The difference between our backlog and remaining performance obligations is due to the exclusion of a portion of our master service agreements under certain contract types from our remaining performance obligations as these contracts can be canceled for convenience at any time by us or the customer without considerable cost incurred by the customer. Our estimated backlog also includes our proportionate share of unconsolidated joint venture contracts. Additional information related to our remaining performance obligations is provided in Note 6–Revenue Recognition in the accompanying notes to our Consol