What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2021-03-03 compared with 2020-03-04 · 387 added, 333 removed, 874 unchanged (45% of the section changed)

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Notes to Financial Statements

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Management’s Report on Internal Control Over Financial Reporting

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Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies and procedures may deteriorate.

Management’s assessment of and conclusion on the Company’s internal control over financial reporting as of December 31, 2019 excluded the internal control over financial reporting of CSI Electrical Contractors, Inc., which was acquired on July 15, 2019.

CSI Electrical Contractors, Inc.

represented a total of approximately 14.8% and 20.4% of total assets and net assets, respectively, as of December 31, 2019, and 6.7% and (2.9)% of contract revenues and income before income taxes, respectively, for the year then ended.

Such exclusion is in accordance with Securities and Exchange Commission guidance that the assessment of a recently acquired business may be omitted in management’s report on internal controls over financial reporting, provided the acquisition took place during the fiscal year being assessed.

Crowe LLP, an independent registered public accounting firm, who audited and reported on the 2019 Financial Statements included in this Annual Report on Form 10-K, has audited the effectiveness of MYR Group’s internal control over financial reporting as of December 31, 2019 as stated in their report which appears herein.

Crowe LLP, the independent registered public accounting firm that audited and reported on the 2020 Financial Statements included in this Annual Report on Form 10-K, has audited the effectiveness of MYR Group’s internal control over financial reporting as of December 31, 2020 and has issued an attestation report on MYR Group’s internal control over financial reporting which appears herein.

March 3, 2021

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of Directors of MYR Group Inc.

Rolling Meadows, IL

Henderson, CO

Opinions on the Financial Statements and Internal Control over Financial Reporting

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Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

As permitted, the Company has excluded the operations of CSI Electrical Contractors, Inc.

acquired during 2019, which is described in Note 2 of the consolidated financial statements, from the scope of management’s report on internal control over financial reporting.

As such, it has also been excluded from the scope of our audit of internal control over financial reporting.

Our audits also included performing such other procedures as we considered necessary in the circumstances.

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Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external

purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

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Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Evaluation of variable consideration and estimated costs to complete on select long-term fixed price construction contracts

As described in Note 1 of the Company’s consolidated financial statements, Organization, Business, and Significant Accounting Policies, and Note 3, Revenue Recognition, the Company recognizes revenue on fixed price construction projects over time using the cost-to-cost method.

The amount of contract revenues and gross profit recognized on fixed price construction contracts is dependent on the contract price, the actual contract costs incurred, and the forecasted contract revenues and contract costs for construction projects.

The recognition of revenue on fixed price construction contracts involves significant estimates based on specific project conditions and performance and due to uncertainty about estimates of costs to complete, and uncertainty in the outcome of discussions with customers on the valuation of change orders and claims.

The Company measures progress towards completion using the cost-to-cost method, which measures the progress as the ratio of actual contract costs incurred to date to the total estimated cost.

The Company recognizes revenue related to change orders only when it is probable that the change order will result in an addition to contract value and can be reliably estimated.

The Company evaluates change orders and claims based on historical experience with the customer, similar contracts, and on an individual basis, which involves significant judgment.

The Company recognizes estimated amounts of variable consideration in transaction price to the extent that it is probable there will not be a significant reversal of revenue.

Changes in estimates of variable consideration and costs to complete on in-process construction projects could have a significant impact on the amount of contract revenue recognized.

We identified auditing management’s estimates of variable consideration for change orders and claims and estimated costs to complete associated with the revenue recognition on select long-term fixed price construction contracts to be a critical audit matter.

The critical audit matter relates to select long-term fixed price construction contracts, based on magnitude of estimated costs to complete and the stage of completion of the contract.

These estimates require management to make assumptions about future events and, as a result, a high degree of auditor judgment is involved in auditing these estimates.

Due to the factors above, auditing management’s estimates of costs to complete and variable consideration required extensive audit procedures.

Our audit procedures to address the critical audit matter included the following:

– Tested the operating effectiveness of controls over the reasonableness of estimates of costs to complete contracts and estimates of variable consideration recognized on contracts;

– Evaluated management’s process for estimating the costs to complete for select long-term fixed price construction contracts and evaluated the reasonableness of the significant assumptions used in the estimates;

– Agreed a sample of contract costs incurred to supporting documentation;

– Performed corroborative interviews of management and project personnel regarding facts and circumstances relevant to the accounting for such contracts;

– Evaluated variable consideration recognized related to construction projects by comparing management’s estimates to subsequent actual data, evaluating the contracts and other documents that support estimates made by management, and obtaining legal correspondence from internal and external counsel;

– Performed procedures to retrospectively assess management’s historical ability to accurately estimate variable consideration and cost to complete of construction contracts.

/s/ Crowe LLP

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March 3, 2021

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MYR GROUP INC.

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Accounts receivable, net of allowances of $ 1,696 and $ 3,364 , respectively

Contract assets

385,938 388,479

Contract assets, net of allowances of $ 359 and $ 147 , respectively

185,803 217,109

Current portion of receivable for insurance claims in excess of deductibles 11,859 6,415

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Property and equipment, net of accumulated depreciation of $ 294,366 and $ 272,865 , respectively

185,114 185,344

Operating lease right-of-use assets 22,291 22,958

Goodwill 66,065 66,060

Intangible assets, net of accumulated amortization of $ 14,467 and $ 10,880 , respectively

51,365 54,940

Receivable for insurance claims in excess of deductibles 27,043 30,976

Investment in joint venture 3,040 4,722

Other assets 4,257 3,687

Total assets $ 995,859 $ 1,007,871

LIABILITIES AND STOCKHOLDERS’ EQUITY

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Total stockholders’ equity attributable to MYR Group Inc.

429,288 364,471

Noncontrolling interest 4 4

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The accompanying notes are an integral part of these Financial Statements.

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MYR GROUP INC.

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Contract costs 1,971,539 1,857,001 1,364,109

Gross profit 275,853 214,158 167,060

Selling, general and administrative expenses 188,535 156,674 118,737

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Interest expense ( 4,563 ) ( 6,225 ) ( 3,652 )

Other income (expense), net

Income before income tax expense

Other expense, net ( 606 ) ( 515 ) ( 3,616 )

Income before provision for income taxes 81,385 50,442 43,068

Income tax expense 22,626 14,228 11,774

Net income 58,759 36,214 31,294

net income (loss) attributable to noncontrolling interest — ( 1,476 ) 207

Net income attributable to MYR Group Inc.

$ 58,759 $ 37,690 $ 31,087

Income per common share attributable to MYR Group Inc.:

– Basic $ 3.52 $ 2.27 $ 1.89

– Diluted $ 3.48 $ 2.26 $ 1.87

Weighted average number of common shares and potential common shares outstanding:

– Basic 16,684 16,587 16,441

– Diluted 16,890 16,699 16,585

Net income $ 58,759 $ 36,214 $ 31,294

Other comprehensive income (loss):

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Total comprehensive income attributable to MYR Group Inc.

$ 59,228 $ 37,437 $ 31,193

The accompanying notes are an integral part of these Financial Statements.

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MYR GROUP INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Comprehensive

Income (Loss)

Shareholders’

Noncontrolling

(in thousands)

Preferred Stock Common Stock Additional

Capital Accumulated

Other Comprehensive Income (Loss) Retained

Shareholders’ Equity Noncontrolling

Interest Total

(in thousands) Shares Amount

Balance at December 31, 2017 $ — 16,465 $ 163 $ 143,934 $ ( 299 ) $ 143,241 $ 287,039 $ — $ 287,039

Adjustment to adopt ASU No.

Net income — — — — — 31,087 31,087 207 31,294

Adjustment to adopt ASC 606 — — — — — 695 695 — 695

Stock issued under compensation plans, net — 132 2 1,895 — — 1,897 — 1,897

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Shares repurchased — ( 33 ) — ( 756 ) — ( 287 ) ( 1,043 ) — ( 1,043 )

Noncontrolling interest acquired — — — — — — — 1,273 1,273

Other comprehensive income — — — — 106 — 106 — 106

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Balance at December 31, 2018 — 16,565 165 148,276 ( 193 ) 174,736 322,984 1,480 324,464

Adjustment to adopt ASC 606

Net income — — — — — 37,690 37,690 ( 1,476 ) 36,214

Stock issued under compensation plans, net — 105 1 340 — — 341 — 341

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Shares repurchased — ( 23 ) — ( 571 ) — ( 207 ) ( 778 ) — ( 778 )

Noncontrolling interest acquired

Other comprehensive income

Other comprehensive loss — — — — ( 253 ) — ( 253 ) — ( 253 )

Stock issued – other — 2 — 84 — — 84 — 84

Balance at December 31, 2019 — 16,649 166 152,532 ( 446 ) 212,219 364,471 4 364,475

Net income — — — — — 58,759 58,759 — 58,759

Adjustment to adopt ASC 326 — — — — — ( 268 ) ( 268 ) — ( 268 )

Stock issued under compensation plans, net — 108 1 748 — — 749 — 749

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Shares repurchased — ( 25 ) — ( 422 ) ( 230 ) ( 652 ) — ( 652 )

Other comprehensive loss

Other comprehensive income — — — — 469 — 469 — 469

Stock issued – other — 2 — 72 — — 72 — 72

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The accompanying notes are an integral part of these Financial Statements.

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MYR GROUP INC.

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Cash flows from operating activities:

Adjustments to reconcile net income to net cash flows provided by (used in) operating activities:

Net income $ 58,759 $ 36,214 $ 31,294

Adjustments to reconcile net income to net cash flows provided by operating activities:

Depreciation and amortization of property and equipment 42,867 40,667 38,070

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Receivable for insurance claims in excess of deductibles ( 1,511 ) ( 9,646 ) ( 9,229 )

Other assets ( 15,458 ) ( 10,327 ) 2,280

Accounts payable ( 43,079 ) 22,492 19,953

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Other liabilities 37,627 ( 8,606 ) 10,119

Net cash flows provided by (used in) operating activities

Net cash flows provided by operating activities 175,167 64,899 84,789

Cash flows from investing activities:

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Other financing activities 13,249 84 38

Net cash flows provided by financing activities

Net cash flows provided by (used in) financing activities ( 124,296 ) 73,356 10,642

Effect of exchange rate changes on cash 326 132 ( 64 )

Net increase (decrease) in cash and cash equivalents

Net increase in cash and cash equivalents 10,271 4,890 2,164

Cash and cash equivalents:

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The accompanying notes are an integral part of these Financial Statements.

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MYR GROUP INC.

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Sturgeon Electric Company, Inc., a Michigan corporation;

MYR Transmission Services, Inc., a Delaware corporation;

MYR Energy Services, Inc., a Delaware corporation;

Boulos Company, a Delaware corporation;

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C&I provides a broad range of services, which include design, installation, maintenance and repair of commercial and industrial wiring, the installation of traffic networks and the installation of bridge, roadway and tunnel lighting.

The COVID-19 pandemic caused a slowdown of certain projects due to specific state, local, municipal and customer mandated stay-at-home orders and new project requirements that were established to protect construction workers and the general public, most of which have impacted our C&I segment.

Although the majority of stay-at-home orders have been phased out, we are still experiencing impacts associated with the COVID-19 project-specific protocols.

We expect the project-specific requirements to remain in place which will continue to impact project schedules and workflow going forward, however the Company is unable to predict the ultimate impact that COVID-19 will have on our business, employees, liquidity, financial condition, results of operations and cash flows.

Additionally, key estimates that could potentially be impacted include estimates of costs to complete contracts, the recoverability of goodwill and intangibles and allowance for doubtful accounts.

Significant Accounting Policies

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Revenue Recognition

On January 1, 2018, the Company adopted accounting standards update (“ASU”) No.

2014-09, Revenue from Contracts with Customers (Topic 606) using the modified retrospective method for contracts that were not completed as of January 1, 2018.

Results for reporting periods beginning after January 1, 2018 are presented under this new pronouncement, while prior period amounts were not adjusted and continue to be reported under the accounting standard Revenue Recognition (Topic 605) , which was in effect for those periods.

Differences in revenue recognition under Topic 606 were due to accelerated recognition of contract provisions related to variable consideration previously not permitted to be recognized under Topic 605 until no remaining contingency existed related to this consideration.

Under Topic 606, the Company recognizes revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for goods or services provided.

The Company recognizes revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for goods or services provided.

Revenue associated with contracts with customers is recognized over time as the Company’s performance creates or enhances customer-controlled assets or creates or enhances an asset with no alternative use, for which the Company has an enforceable right to receive compensation as defined under the contract.

To determine the amount of revenue to recognize over time, the Company estimates profit by determining the difference between total estimated revenue and total estimated cost of a contract.

from the contract cost portion of this accrual based on current gross margin rates to be consistent with its cost method of revenue recognition.

In addition, the Company estimates a cost accrual every quarter that represents unbilled invoicing activity for services performed by subcontractors and suppliers during the quarter, and estimates revenue from the contract cost portion of this accrual based on current gross margin rates to be consistent with its cost method of revenue recognition.

The estimated value of unbilled amounts are determined using a regression analysis that estimates value based on the Company’s historical experience, and is adjusted for large individual projects.

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A portion of the work the Company performs requires financial assurances in the form of performance and payment bonds or letters of credit at the time of execution of the contract.

Many of the Company’s

contracts include retention provisions of up to 10%, which are generally withheld from each progress payment as retainage until the contract work has been completed and approved.

Many of the Company’s contracts include retention provisions of up to 10 %, which are generally withheld from each progress payment as retainage until the contract work has been completed and approved.

The Company provides warranties to customers on a basis customary to the industry;

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Sales tax and value added tax collected from customers is included in other current liabilities on the Company’s consolidated balance sheets.

Prior to January 1, 2018 the Company reported revenue under the accounting standard Revenue Recognition (Topic 605) , under which revenues from long-term contracts were accounted for using the percentage-of-completion method of accounting.

Under the percentage-of-completion method, the Company estimated profit as the difference between total estimated revenue and total estimated cost of a contract and recognized that profit over the contract term based on costs incurred under the cost-to-cost method.

Under Topic 605, revenues from the Company’s construction services were performed under fixed-price, time-and-equipment, time-and-materials, unit-price, and cost-plus fee contracts.

For fixed-price and unit-price contracts, the Company used the ratio of cost incurred to date on the contract to management’s estimate of the contract’s total cost, to determine the percentage of completion on each contract.

This method was used as management considered expended costs to be the best available measure of progression of these contracts.

Contract cost included all direct costs on contracts, including labor and material, subcontractor costs and those indirect costs related to contract performance, such as supplies, fuel, tool repairs and depreciation.

The Company recognized revenues from construction services with fees based on time-and-materials, or cost-plus fee as the services were performed and amounts were earned.

If contracts included contract incentive or bonus provisions, they were included in estimated contract revenues only when the achievement of such incentive or bonus was reasonably certain.

Under Topic 605, contract costs incurred to date and expected total contract costs were continuously monitored during the term of the contract.

Changes in job performance, job conditions and final contract settlements were factors that influenced management’s assessment of total contract value and the total estimated costs to complete those contracts and therefore, the Company’s profit recognition.

These changes, which included contracts with estimated costs in excess of estimated revenues, were recognized in contract costs in the period in which the revisions were determined.

At the point the Company anticipated a loss on a contract, the Company estimated the ultimate loss through completion and recognized that loss in the period in which the possible loss was identified.

Joint Ventures and Noncontrolling Interests

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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.

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.

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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.

For the year ended December 31, 2019, the Company recorded foreign currency gains of approximately $0.1 million.

Foreign currency losses, recorded in other income, net, for the year ended December 31, 2020, were not significant.

Effective foreign currency transaction gains and losses, arising primarily from long-term assets and liabilities are recorded in the foreign currency translation adjustment line on the Company’s consolidated statements of comprehensive income.

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Actual results could differ from these estimates.

As of December 31, 2019 and 2018, the Company recognized revenues of $35.9 million and $3.4 million, respectively, related to significant change orders and/or claims that had been included as contract price adjustments on certain contracts which were in the process of being negotiated in the normal course of business.

As of December 31, 2020 and 2019, the Company recognized revenues of $ 14.7 million and $ 35.9 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.

These aggregate amounts, which were included in “Contract assets” in the accompanying consolidated balance sheets, represent the Company’s estimates of additional contract revenues that were earned and probable of collection, however, the amount ultimately realized could be significantly higher or lower than the estimated amount.

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Advertising costs are expensed when incurred.

Advertising costs, included in selling, general and administrative expenses, were $0.8 million for the year ended December 31, 2019, and $0.7 million for the years ended December 31, 2018 and 2017, respectively.

Advertising costs, included in selling, general and administrative expenses, were $ 0.7 million, $ 0.8 million and $ 0.7 million for the years ended December 31, 2020, 2019 and 2018, respectively.

The Company follows the liability method of accounting for income taxes.

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The Company determines compensation expense for stock-based awards based on the estimated fair values at the grant date and recognize the related compensation expense over the vesting period.

The Company uses the straight-line amortization method to recognize compensation expense related to stock-based awards, such as restricted stock, restricted stock units and phantom stock units, that have only service conditions.

The Company uses the straight-line amortization method to recognize compensation expense related to stock-based awards, such as restricted stock and restricted stock units, that have only service conditions.

This method recognizes stock compensation expense on a straight-line basis over the requisite service period for the entire award.

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The Company recognizes compensation expense related to performance awards with market-based performance metrics on a straight-line basis over the requisite service period.

Upon adoption ASU No.

2016-09, Compensation — Stock Compensation (Topic 718) in January of 2017, the Company elected to discontinue estimating future forfeitures and recognize forfeitures as they occur.

Prior to the adoption, the Company used historical data to estimate the forfeiture rate applied to stock grants.

The Company recognizes forfeitures as they occur.

Shares issued under the Company’s stock-based compensation program are taken out of authorized but unissued shares.

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Accounts Receivable and Allowance for Doubtful Accounts

The Company does not charge interest to its customers and carries its customer receivables at their face amounts, less an allowance for doubtful accounts.

The Company does not charge interest to its customers and carries its customer receivables at their face amounts, net of contract retainage, less an allowance for doubtful accounts.

Based on the Company’s experience in recent years, the majority of customer balances at each balance sheet date are collected within twelve months.

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Contract retainages associated with contract work that has been completed and billed but not paid by its customers until the contracts are substantially complete, pursuant to contract retainage provisions under the contract, are also included in contract assets.

The allowance for collection of contract retainage was not significant as of December 31, 2019 and 2018.

The allowance for collection of contract retainage was $ 0.4 million and $ 0.1 million as of December 31, 2020 and 2019, respectively.

The Company’s consolidated balance sheets present contract liabilities that contain deferred revenue that represent any costs incurred on contracts in process for which revenue has not yet been recognized.

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If the carrying value of property and equipment exceeds its fair value, an impairment charge would be recorded in the statement of operations.

On January 1, 2019, the Company adopted ASU No.

2016-02, Leases (Topic 842) using the modified retrospective method.

Under this guidance, the net present value of future lease payments are recorded as right-of-use assets and liabilities.

In addition, the Company elected the ‘package of practical expedients’ permitted under the transition guidance within the new standard, which among other things, allowed the Company to carry forward the historical lease classification.

In addition, the Company elected not to utilize the hindsight practical expedient to determine the lease term for existing leases.

The Company elected the short-term lease recognition exemption for all leases that qualify.

This means, for those leases that qualify, the Company did not recognize right-of-use assets or lease liabilities, including not recognizing right-of-use assets or lease liabilities for existing short-term leases of those assets in transition.

The Company also elected the practical expedient to not separate lease and non-lease components for our real estate and vehicle leases.

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 seven 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.

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.

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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.

As of December 31, 2019, the Company had several leases with residual value guarantees, due to the acquisition of CSI.

As of December 31, 2020, the Company had several leases with residual value guarantees.

The total amount probable of being owed of residual leases guarantees is not significant.

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Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

Prior to January, 2019 the Company accounted for its leases in accordance with Leases (Topic 840) .

Leases with characteristics of operating leases were expensed on a straight-line basis over the life of the lease on the Company’s consolidated statements of operations.

Leases with the characteristics of capital leases were recorded at fair value on the Company’s consolidated balance sheets.

The asset portion was included in property and equipment on the Company’s consolidated balance sheets and was amortized as depreciation expense on the Company’s consolidated statements of operations.

The liability portion was included on the Company’s consolidated balance sheets as current and long term portions of capital leases.

These liabilities were amortized as interest expense and lease expense on the Company’s consolidated statements of operations.

The Company carries insurance policies, which are subject to certain deductibles, for workers’ compensation, general liability, automobile liability and other coverages.

The deductible for each line of coverage is up to $ 1.0 million, except for wildfire coverage which has a deductible of $ 2.0 million.

Certain health benefit plans are subject to a deductible up to $0.2 million, for qualified individuals.

Certain health benefit plans are subject to a stop-loss limit of up to $ 0.2 million, for qualified individuals.

Losses up to the deductible 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.

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Intangible assets with finite lives are amortized on a straight-line basis over their estimated useful lives.

The Company reviews goodwill and intangible assets with indefinite lives for impairment on an annual basis at the beginning of the fourth quarter, or when circumstances change, such as a significant adverse change in the business climate or the decision to sell a business, both of which would indicate that impairment may have occurred.

The Company performs either a qualitative or quantitative assessment to review goodwill and intangible assets with indefinite lives for impairment on an annual basis.

This assessment is performed at the beginning of the fourth quarter, or when circumstances change, such as a significant adverse change in the business climate or the decision to sell a business, both of which would indicate that impairment may have occurred.

Intangible assets with finite lives are also reviewed for impairment and tested for recoverability whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

The Company may perform either a qualitative assessment or a two-step goodwill impairment test.

The qualitative assessment considers financial, industry, segment and macroeconomic factors.

If the qualitative assessment indicates a potential for impairment, the two-step method is used to determine if impairment exists.

The two-step method begins with a comparison of the fair value of the reporting unit with its carrying value.

If the carrying amount of the reporting unit exceeds its fair value, the second step of the process involves a comparison of the implied fair value and carrying value of the goodwill of that reporting unit.

The company also performs a qualitative assessment on intangible assets with indefinite lives.

If the qualitative assessment indicates a potential for impairment, a quantitative impairment test would be performed to compare the fair value of the indefinite-lived intangible asset with its carrying value.

A qualitative assessment considers financial, industry, segment and macroeconomic factors, if the qualitative assessment indicates a potential for impairment, a quantitative assessment is performed to determine if impairment exists.

The quantitative assessment begins with a comparison of the fair value of the reporting unit or intangible asset with its carrying value.

If the carrying amount of the reporting unit or intangible asset exceeds its fair value, an impairment loss would be recognized in an amount equal to that excess, limited to the total amount of the goodwill allocated to the reporting unit or intangible asset.

If the carrying value of goodwill or other indefinite lived assets exceeds its implied fair value, an impairment charge would be recorded in the statement of operations.

As a result of the annual qualitative review process in 2019 and 2017, the Company determined it was not necessary to perform a two-step analysis.

In 2018, the Company performed a two-step analysis on goodwill and intangible assets with indefinite lives.

The first step involves a comparison of the fair value of the reporting unit with its carrying value.

If the carrying value of goodwill exceeds its implied fair value, an impairment charge is recorded in the statement of operations.

The step-one analysis did not indicate that the Company’s goodwill or indefinite-lived intangible assets were impaired.

As a result, no step-two analysis was performed.

As a result of the annual qualitative review process in 2020 and 2019, the Company determined it was not necessary to perform a quantitative assessment.

In 2018, the Company performed a quantitative assessment on goodwill and intangible assets with indefinite lives, this assessment did not indicate that the Company’s goodwill or indefinite lived intangible assets were impaired.

Concentrations

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For the years ended December 31, 2020, 2019 and 2018, no single customer accounted for more than 10.0% of annual revenues.

For the year ended December 31, 2017, one T&D customer accounted for 10.7% of our revenues.

The Company grants trade credit under contractual payment terms, generally without collateral, to its customers, which include high credit quality electric utilities, governmental entities, general contractors and builders, owners and managers of commercial and industrial properties.

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Under certain circumstances such as foreclosures or negotiated settlements, the Company may take title to the underlying assets in lieu of cash in settlement of receivables.

As of December 31, 2019 and 2018, none of the Company’s customers

individually exceeded 10.0% of accounts receivable.

As of December 31, 2020 and 2019, none of the Company’s customers individually exceeded 10.0% of accounts receivable.

The Company believes the terms and conditions in its contracts, billing and collection policies are adequate to minimize the potential credit risk.

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Recently Adopted Accounting Pronouncements

In February 2016, the FASB issued ASU No.

2016-02, Leases (Topic 842) .

The amendments under this pronouncement changed the way all leases with durations in excess of one year are treated.

Under this guidance, lessees are required to recognize virtually all leases on the balance sheet as a right-of-use asset and an associated finance lease liability or operating lease liability.

The right-of-use asset represents the lessee’s right to use, or control the use of, a specified asset for the specified lease term.

The lease liability represents the lessee’s obligation to make lease payments arising from the lease, measured on a discounted basis.

Based on certain characteristics, leases are classified as finance leases or operating leases.

Finance lease liabilities, which contain provisions similar to capitalized leases under the prior accounting standards, are amortized as amortization expense and interest expense in the statement of operations.

Operating lease liabilities and right-of-use assets are adjusted to result in a single straight-line lease expense over the life of the lease.

On January 1, 2019, the Company adopted ASU No.

2016-02 , Leases (Topic 842) using the modified retrospective method.

The modified retrospective basis provides a method for recording existing leases at adoption and in comparative periods that approximates the results of a full retrospective approach using the cumulative-effect approach for recording the transition adjustment as of the effective date.

Financial results reported in prior periods are unchanged.

See Note 4–Lease Obligations for further information related to the Company’s accounting policy and transition disclosures associated with the adoption of this pronouncement.

Recently Issued Accounting Pronouncements

In January 2017, the FASB issued ASU No.

2017-04, Intangibles — Goodwill and Other (Topic 350):

Simplifying the Test for Goodwill Impairment , which simplifies the subsequent measurement of goodwill, through elimination of Step 2 from the goodwill impairment test.

Instead, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount.

The update is effective for any annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019.

Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017.

The guidance requires application on a prospective basis.

The Company does not expect that this pronouncement will have a significant impact on its financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments , which introduced an expected credit loss methodology for the measurement and recognition of credit losses on most financial instruments, including trade receivables and off-balance sheet credit exposures.

1 unchanged sentence

This ASU also requires disclosure of information regarding how a company developed its allowance, including changes in the factors that influenced management’s estimate of expected credit losses and the reasons for those changes.

The ASU and its related clarifying updates are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted.

The adoption of this standard will be through a cumulative-effect adjustment to retained earnings

as of the effective date.

Based on our historical experience, the Company does not expect that this pronouncement will have a significant impact in its financial statements or on the estimate of the allowance for uncollectable accounts.

On January 1, 2020, the Company adopted this ASU resulting in a $ 0.3 million cumulative-effect adjustment to retained earnings associated with the increase in the Company’s allowance for doubtful accounts.

Additionally, in connection with the adoption of this ASU the Company adjusted its presentation for allowance for doubtful accounts associated with unbilled revenue, which represents a portion of the Company’s contract assets, and were previously classified as accounts receivable net of allowances.

Total allowance for doubtful accounts associated with contract assets as of December 31, 2020 and at the time of adopting this ASU were $ 0.4 million.

The Company’s consolidated balance sheet as of December 31, 2019 and consolidated statements of cash flows for the year ended December 31, 2019 have not been adjusted for this change in treatment of allowance for doubtful accounts associated with unbilled revenue.

See Note 3–Contract Assets and Liabilities for further information related to the Company’s contract assets.

In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350):

Simplifying the Test for Goodwill Impairment , which simplifies the subsequent measurement of goodwill, through the elimination of Step 2 from the goodwill impairment test.

Instead, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount.

The Company adopted this ASU on a prospective basis in January 2020 and there was no effect on the Company’s consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820):

Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement , which modifies the disclosure requirements for Level 1, Level 2 and Level 3 instruments in the fair value hierarchy.

The guidance is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted for any eliminated or modified disclosures.

The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements or disclosures.

The Company adopted this ASU in January 2020 and there was no effect on the consolidated financial statements or disclosures.

Recently Issued 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.

1 unchanged sentence

Upon adoption, the Company must apply certain aspects of this standard retrospectively for all periods presented while other aspects are applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption.

The Company is evaluating the impact this update will have on its financial statements.

The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements or disclosures.

CSI Electrical Contractors, Inc.

3 unchanged sentences

The total consideration, after net asset adjustments of approximately $ 1.0 million, was $ 80.7 million which was funded through borrowings under the Company’s credit facility.

The Company has finalized the purchase price accounting relating to the acquisition of CSI.

The Company finalized the purchase price accounting relating to the acquisition of CSI during the year ended December 31, 2019.

The purchase agreement also includes contingent consideration provisions for margin guarantee adjustments based upon contract performance subsequent to the acquisition.

1 unchanged sentence

Changes in contract estimates, such as modified costs to complete or change order recognition, will result in changes to these margin guarantee estimates.

Changes in contingent consideration, subsequent to the acquisition, related to the margin guarantee adjustments on contracts of approximately $2.0 million were recorded in other expense for the year ended December 31, 2019.

Future margin guarantee adjustments, if any, are expected to be recognized through 2020.

Changes in contingent consideration, subsequent to the acquisition, related to the margin guarantee adjustments on contracts of approximately $ 0.6 million and $ 2.0 million were recorded in other expense for the year ended December 31, 2020 and 2019, respectively.

Future margin guarantee adjustments, if any, are expected to be recognized in 2021.

The Company could also be required to make compensation payments contingent on the successful achievement of certain performance targets and continued employment of certain key executives of CSI.

These payments are recognized as compensation expense on the Company’s consolidated statements of operations as incurred.

For the year ended December 31, 2019 the Company recognized $0.4 million of compensation expense associated with these contingent payments.

The results of operations for CSI are included on the Company’s consolidated statement of operations and the C&I segment from the date of acquisition.

Costs of approximately $0.6 million related to the acquisition were included in selling, general and administrative expenses on the Company’s consolidated statement of operations for the year ended December 31, 2019.

Payment of amounts earned, if any, as defined in the purchase agreement, will be made in 2024.

These payments are recognized as compensation expense on the Company’s consolidated statements of operations when deemed probable.

For the year ended December 31, 2020 and 2019 the Company recognized $ 4.0 million and $ 0.4 million of compensation expense associated with these contingent payments.

The following table summarizes the allocation of the opening balance sheet from the date of the CSI acquisition:

(in thousands)

(as of acquisition

date) July 15, 2019

Final Acquisition

(in thousands) (as of acquisition date) July 15, 2019 Measurement

Adjustments Final Acquisition

Consideration paid $ 79,720 $ — $ 79,720

16 unchanged sentences

Net identifiable assets and liabilities 71,391 ( 147 ) 71,244

The Company has determined the fair value of the assets acquired and liabilities assumed for the purposes of allocating the purchase price.

The goodwill to be recognized, which represents the excess of the purchase price over the net amount of the fair values assigned to assets acquired and liabilities assumed, is primarily attributable to the value of an assembled workforce and other non-identifiable assets.

No synergies were anticipated in the acquisition as CSI will function as an individual district within the Company’s operating structure.

All of the goodwill and identifiable intangible assets are expected to be tax deductible per applicable Internal Revenue Service regulations.

The following unaudited supplemental pro forma results of operations have been provided for illustrative purposes only and do not purport to be indicative of the actual results that would have been achieved by the combined companies for the periods presented or that may be achieved by the combined companies in the future.

Future results may vary significantly from the results reflected in the following pro forma financial information because of future events and transactions, as well as other factors:

Year ended December 31,

(in thousands, except per share data)

Contract revenues

Net income attributable to MYR Group, Inc.

Income per common share attributable to MYR Group Inc.:

Weighted average number of common shares and potential common shares outstanding:

The pro forma combined results of operations for the year ended December 31, 2019 and 2018 were prepared by adjusting the historical results of the Company to include the historical results of CSI, as if the acquisition occurred on January 1, 2018.

These pro forma results were adjusted for the following:

additional depreciation associated with the estimated step-up in fair value of the property and equipment acquired;

transaction costs associated with the acquisition;

estimated compensation expense related to contingent payments associated with the achievement of certain performance targets and continued employment of certain key executives of CSI;

the estimated amortization related to the acquired intangible assets discussed above;

interest expense recorded by CSI and the additional interest expense related to the incremental borrowings of $79.7 million on the Company’s credit facility as if the borrowing occurred on January 1, 2018;

the income tax effect of pro forma adjustments at the statutory tax rate.

Revenues of approximately $137.7 million and net loss before income taxes of approximately $1.5 million, net of CSI margin guarantee adjustments on contracts of $2.0 million and intangible asset amortization of $1.8 million, were included on the Company’s consolidated results of operations for the year ended December 31, 2019 related to the acquisition of CSI.

Goodwill $ 8,962 $ 501 $ 9,463

Huen Electric, Inc.

2 unchanged sentences

The total consideration, after net asset adjustments of approximately $ 10.8 million, was $ 57.9 million which was funded through borrowings under the Company’s credit facility.

The Company has finalized the purchase price accounting relating to the acquisition of the Huen Companies.

All goodwill and identifiable intangible assets are expected to be tax deductible per applicable Internal Revenue Service regulations.

The Company finalized the purchase price accounting relating to the acquisition of the Huen Companies during the year ended December 31, 2019.

The purchase agreement also includes contingent consideration provisions for margin guarantee adjustments based upon performance subsequent to the acquisition on certain contracts.

1 unchanged sentence

Changes in contract estimates, such as modified costs to complete or change order recognition, have resulted and will continue to result in changes to these margin guarantee estimates.

Changes in contingent consideration, subsequent to the acquisition, related to the margin guarantee adjustments on certain contracts of approximately $1.5 million were recorded in other expense for the year ended December 31, 2019.

Margin guarantee adjustments are expected to be finalized in early 2020.

Changes in contingent consideration, subsequent to the acquisition, related to the margin guarantee adjustments on certain contracts of approximately $ 1.5 million and $ 3.9 million were recorded in other expense for the year ended December 31, 2019 and 2018, respectively.

Margin guarantee adjustments were finalized in early 2019.

The Company could also be required to make compensation payments contingent on the successful achievement of certain performance targets and continued employment of certain key executives of the Huen Companies.

These payments are recognized as compensation expense on the Company’s consolidated statements of operations as incurred.

For the year ended December 31, 2019 the Company recognized $1.9 million of compensation expense associated with these contingent payments.

The following table summarizes the allocation of the opening balance sheet from the date of the Huen acquisition:

(in thousands)

acquisition date)

Final Acquisition

Consideration paid

Preliminary estimated net asset adjustments

Total consideration, net of net asset adjustments

Accounts receivable, net

Contract assets

Other current and long term assets

Property and equipment

Intangible assets

Accounts payable

Contract liabilities

Other current liabilities

Net identifiable assets and liabilites

Unallocated intangible assets

Total aquired assets and liabilites

Fair value of aquired noncontrolling interests

Payment of amounts earned, if any, as defined in the purchase agreement, will be made in 2023.

These payments are recognized as compensation expense on the Company’s consolidated statements of operations when deemed probable.

For the years ended December 31, 2020, 2019 and 2018, the Company recognized a net benefit of $ 2.5 million and expense of $ 1.9 million and $ 0.6 million, respectively, of compensation expense associated with these contingent payments.

Contract Assets and Liabilities

1 unchanged sentence

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 contains unbilled revenue (previously identified as costs and estimated earnings in excess of billings) 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 collection of contract retainage was not significant as of December 31, 2019 and 2018.

The Company’s consolidated balance sheets present contract assets which contains 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 December 31, 2020 and $ 0.1 million as of 2019.

Contract assets consisted of the following at December 31:

(in thousands)

(in thousands) 2020 2019 Change

Unbilled revenue $ 97,543 $ 126,087 $ ( 28,544 )

3 unchanged sentences

Contract liabilities consisted of the following at December 31:

(in thousands)

(in thousands) 2020 2019 Change

Deferred revenue $ 155,570 $ 102,673 $ 52,897

2 unchanged sentences

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

(in thousands)

(in thousands) 2020 2019 Change

Contract assets $ 185,803 $ 217,109 $ ( 31,306 )

8 unchanged sentences

billings to date 3,979,403 3,509,472

$ ( 58,027 ) $ 23,414

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 at December 31:

2 unchanged sentences

Deferred revenue ( 155,570 ) ( 102,673 )

$ ( 58,027 ) $ 23,414

Lease Obligations

Change in Accounting Policy

On January 1, 2019, the Company adopted ASU No.

2016-02, Leases (Topic 842) using the modified retrospective method.

Under this guidance, the net present value of future lease payments are recorded as right-of-use assets and liabilities.

In addition, the Company elected not to utilize the hindsight practical expedient to determine the lease term for existing leases.

The Company elected the short-term lease recognition exemption for all leases that qualify.

The Company also elected the practical expedient to not separate lease and non-lease components for our real estate and vehicle leases.

Adoption of the new standard resulted in the recording of additional operating right-of-use assets and operating lease liabilities of approximately $15.1 million, as of January 1, 2019.

The adoption of Topic 842 did not impact the Company’s retained earnings, consolidated net earnings or cash flows.

The following is a summary of the lease-related assets and liabilities recorded as of December 31, 2019:

(in thousands)

Classification on the Consolidated Balance Sheet

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.

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 December 31, 2020, 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:

2020 December 31,

(in thousands) Classification on the Consolidated Balance Sheet

Operating lease right-of-use assets

3 unchanged sentences

Total right-of-use lease assets

$ 22,681 $ 24,436

Operating lease obligations

8 unchanged sentences

Total non-current obligations

15,730 17,222

Total lease obligations

The following is a summary of the lease terms and discount rates as of December 31, 2019:

Weighted-average remaining lease term – finance leases

Weighted-average remaining lease term – operating leases

$ 22,660 $ 24,562

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

2020 December 31,

Weighted-average remaining lease term – finance leases 0.4 years 1.4 years

Weighted-average remaining lease term – operating leases 3.4 years 3.9 years

Weighted-average discount rate – finance leases 2.6 % 2.5 %

Weighted-average discount rate – operating leases 3.91 % 3.8 %

The following is a summary of certain information related to the lease costs for finance and operating leases for the year ended December 31, 2019:

The following is a summary of certain information related to the lease costs for finance and operating leases:

Year ended December 31,

(in thousands) 2020 2019

6 unchanged sentences

Total lease cost $ 10,627 $ 8,460

The following is a summary of other information and supplemental cash flow information related to finance and operating leases for the year ended December 31, 2019:

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

Year ended December 31,

(in thousands) 2020 2019

4 unchanged sentences

The future undiscounted minimum lease payments, as reconciled to the discounted minimum lease obligation indicated on the Company’s consolidated balance sheets, under current portion of operating lease obligations, current portion of finance lease obligations, and operating lease obligations, net of current maturities, as of December 31, 2020 were as follows:

(in thousands)

(in thousands) Finance

Obligations Operating

Obligations Total

2021 $ 321 $ 9,111 $ 9,432

2022 — 7,496 7,496

2023 — 5,502 5,502

2024 — 2,772 2,772

2025 — 1,127 1,127

Thereafter — 795 795

Total minimum lease payments 321 26,803 27,124

3 unchanged sentences

Long-term finance and operating lease obligations $ — $ 15,730 $ 15,730

The financing component for finance lease obligations represents the interest component of capital leases that will be recognized as interest expense in future periods.

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.

1 unchanged sentence

The terms and rental rates of these leases are at market rental rates.

As of December 31, 2019, the minimum lease payments required under these leases totaled $4.5 million, which is to be paid over the next 4.5 years.

The future minimum lease payments required under operating leases as of December 31, 2018 as reported in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 under previous ASC 840 guidance were as follows:

(in thousands)

Total minimum lease payments

Capital Leases

Prior to the adoption of ASU No.

2016-02, Leases (Topic 842) , certain of the Company’s leased vehicles and equipment leases met the characteristics of capital leases.

The economic substance of these leases was a financing transaction for acquisition of the vehicles and equipment and, accordingly, the leases were included in the balance sheets in property and equipment, net of accumulated depreciation, with a corresponding amount recorded in current portion of lease obligations or lease obligations, net of current maturities, as appropriate.

The capital lease assets were amortized on a straight-line basis over the life of the lease or, if shorter, the life of the leased asset, and were included in depreciation expense in the statements of operations.

The interest associated with capital leases was included in interest expense in the statements of operations.

As of December 31, 2018, the Company had $2.7 million of capital lease obligations outstanding, $1.1 million of which was classified as a current liability.

As of December 31, 2018, $2.6 million of leased assets were capitalized in property and equipment, net of accumulated depreciation.

As of December 31, 2020, the minimum lease payments required under these leases totaled $ 3.3 million, which are due over the next 3.5 years.

Fair Value Measurements

5 unchanged sentences

As of December 31, 2020 and 2019, the Company determined that the carrying value of cash and cash equivalents approximated fair value based on Level 1 inputs.

As of December 31, 2019 and 2018, the fair value of the Company’s long-term debt and capital lease obligations, were based on Level 2 inputs.

As of December 31, 2020 and 2019, the fair value of the Company’s long-term debt and finance lease obligations, were based on Level 2 inputs.

The Company’s long-term debt was based on variable and fixed interest rates at December 31, 2020 and 2019.

Long-term debt with variable interest rates was based on rates for new issues with similar remaining maturities and approximated carrying value.

In addition, based on borrowing rates currently available to the Company for borrowings with similar terms, the carrying values of the Company’s capital lease obligations and long term debt with fixed interest rates also approximated fair value.

In addition, based on borrowing rates currently available to the Company for borrowings with similar terms, the carrying values of the Company’s finance lease obligations and long term debt with fixed interest rates also approximated fair value.

Accounts Receivable

2 unchanged sentences

Contract receivables $ 382,096 $ 385,744

Other 5,538 6,099

387,634 391,843

allowance for doubtful accounts ( 1,696 ) ( 3,364 )

$ 385,938 $ 388,479

The roll-forward of activity in the allowance for doubtful accounts was as follows for the years ended December 31:

7 unchanged sentences

Property and equipment consisted of the following at December 31:

(dollars in thousands)

Buildings and improvements

Construction equipment

Office equipment

(dollars in thousands) Estimated

in Years 2020 2019

Land — $ 9,301 $ 9,301

Buildings and improvements 3 to 39

33,452 29,747

Construction equipment 3 to 12

420,002 403,217

Office equipment 3 to 10

16,725 15,944

479,480 458,209

accumulated depreciation and amortization ( 294,366 ) ( 272,865 )

$ 185,114 $ 185,344

Construction equipment includes assets under finance leases — see additional information provided in Note 4 — Lease Obligations to the Financial Statements.

2 unchanged sentences

Goodwill and intangible assets consisted of the following at December 31:

(in thousands)

(in thousands) Gross

Amount Accumulated

Amortization Net

Amount Accumulated

Amortization Net

T&D $ 40,224 $ — $ 40,224 $ 40,224 $ — $ 40,224

C&I 25,841 — 25,841 25,836 — 25,836

Total goodwill $ 66,065 $ — $ 66,065 $ 66,060 $ — $ 66,060

Amortizable Intangible Assets

Backlog $ 5,289 $ 5,289 $ — $ 5,289 $ 4,039 $ 1,250

Customer relationships 31,381 8,914 22,467 31,381 6,623 24,758

Trade names 696 264 432 695 218 477

Indefinite-lived Intangible Assets

Trade names 28,466 — 28,466 28,455 — 28,455

Total intangible assets $ 65,832 $ 14,467 $ 51,365 $ 65,820 $ 10,880 $ 54,940

The increase in goodwill as of December 31, 2019 compared to December 31, 2018 was primarily due to the allocation of $9.5 million of goodwill related to the acquisition of CSI identified during the ongoing analysis of the purchase accounting.

The increase in intangible assets also related to the acquisition of CSI and are being amortized on a straight-line basis over periods ranging up to 12 years.

Additional financial information related to this acquisition is provided in Note 2–Acquisitions to the Financial Statements.

Immaterial foreign currency translation adjustments related to goodwill and intangible assets are netted with the amounts indicated above.

Customer relationships and backlog are being amortized on a straight-line method over an estimated useful life ranging up to 12.5 years and the remaining life of the contract, respectively, and have been determined to have no residual value.

Amortizable trade names are being amortized on a straight-line basis over an estimated useful life of approximately 15 years.

Certain trade names have indefinite lives and, therefore,

are not being amortized.

Certain trade names have indefinite lives and, therefore, are not being amortized.

Intangible asset amortization expense was $ 3.6 million, $ 3.8 million and $ 1.8 million for the years ended December 31, 2020, 2019 and 2018, respectively.

Immaterial foreign currency translation adjustments related to goodwill and intangible assets are netted with the amounts indicated above.

As of December 31, 2020, estimated future intangible asset amortization expense for the each of the next five years and thereafter was as follows:

(in thousands)

(in thousands) Future

Thereafter 11,339

Total $ 22,899

Accrued Liabilities

3 unchanged sentences

Union dues and benefits 17,800 18,747

Taxes 18,130 6,790

Profit sharing and thrift plan 10,763 5,325

1 unchanged sentence

Joint venture liability — 652

Other 9,880 9,218

$ 86,718 $ 64,364

See additional information on net asset adjustments provided in Note 2–Acquisitions to the Financial Statements.

The table below reflects the Company’s total debt, including borrowings under its credit agreement and master loan agreement for equipment notes:

(dollars in thousands)

Stated Interest

Balance as of

(dollars in thousands) Inception

Date Stated Interest

(per annum) Payment

Frequency Term

(years) Outstanding Balance as of December 31,

2020 Outstanding Balance as of December 31,

Credit Agreement

Revolving loans

Revolving loans 9/13/2019 Variable Variable 5 $ — $ 103,820

Equipment Notes

Equipment Note 1

Equipment Note 2

Equipment Note 3

Equipment Note 4

Equipment Note 5

Equipment Note 6

Equipment Note 7

Equipment Note 8

Equipment Note 9

Equipment Note 1 9/28/2018 4.16 % Semi-annual 5 $ — $ 10,643

Equipment Note 2 9/28/2018 4.23 % Semi-annual 7 — 11,200

Equipment Note 3 12/31/2018 3.97 % Semi-annual 5 — 1,953

Equipment Note 4 12/31/2018 4.02 % Semi-annual 7 — 2,108

Equipment Note 5 12/31/2018 4.01 % Semi-annual 7 — 1,751

Equipment Note 6 6/25/2019 2.89 % Semi-annual 7 12,896 14,286

Equipment Note 7 6/24/2019 3.09 % Semi-annual 5 6,980 9,033

Equipment Note 8 12/27/2019 2.75 % Semi-annual 5 5,513 6,496

Equipment Note 9 12/24/2019 3.01 % Semi-annual 7 4,031 4,534

29,420 62,004

Total debt 29,420 165,824

current portion of long-term debt

( 4,381 ) ( 8,737 )

Long-term debt $ 25,039 $ 157,087

1 unchanged sentence

On September 13, 2019, the Company entered into a five-year amended and restated credit agreement (the “Credit Agreement”) with a syndicate of banks led by JPMorgan Chase Bank, N.A.

and Bank of America, N.A, that provides for a $375 million facility (the “Facility”), which can be used for revolving loans and up to $150 million may be used for letters of credit.

and Bank of America, N.A, that provides for a $ 375 million facility (the “Facility”), subject to certain financial covenants as defined in the Credit Agreement, which can be used for revolving loans and up to $ 150 million may be used for letters of credit.

The Facility also allows for revolving loans and letters of credit in Canadian dollars and other currencies, up to the U.S.

4 unchanged sentences

If an event of default occurs and is continuing, on the terms and subject to the conditions set forth in the Credit Agreement, amounts outstanding under the Facility may be accelerated and may become or be declared immediately due and payable.

Borrowings under the Credit Agreement are used for refinancing existing indebtedness, working capital, capital expenditures, acquisitions and other general corporate purposes.

Borrowings under the Credit Agreement are used for refinancing existing indebtedness, working capital, capital expenditures, acquisitions, share repurchases, and other general corporate purposes.

Amounts borrowed under the Credit Agreement bear interest, at the Company’s option, at a rate equal to either (1) the Alternate Base Rate (as defined in the Credit Agreement), plus an applicable margin ranging from 0.00 % to 0.75 %;

1 unchanged sentence

The applicable margin is determined based on the Company’s consolidated leverage ratio (the “Leverage Ratio”) which is defined in the Credit Agreement as Consolidated Total Indebtedness (as defined in the Credit Agreement) divided by Consolidated EBITDA (as defined in the Credit Agreement).

Letters of credit issued under the Facility are subject to a letter of credit

fee of 1.00% to 1.75% for non-performance letters of credit or 0.50% to 0.875% for performance letters of credit, based on the Company’s consolidated Leverage Ratio.

Letters of credit issued under the Facility are subject to a letter of credit fee of 1.00 % to 1.75 % for non-performance letters of credit or 0.50 % to 0.875 % for performance letters of credit, based on the Company’s consolidated Leverage Ratio.

The Company is subject to a commitment fee of 0.15 % to 0.25 %, based on the Company’s consolidated Leverage Ratio, on any unused portion of the Facility.

1 unchanged sentence

The weighted average interest rate on borrowings outstanding on the Facility for the year ended December 31, 2020 was 2.35 % per annum.

Under the Credit Agreement, the Company is subject to certain financial covenants and must maintain a maximum consolidated Leverage Ratio of 3.0 and a minimum interest coverage ratio of 3.0, which is defined in the Credit Agreement as Consolidated EBITDA (as defined in the Credit Agreement) divided by interest expense (as defined in the Credit Agreement).

Under the Credit Agreement, the Company is subject to certain financial covenants and is limited to a maximum consolidated Leverage Ratio of 3.0 and a minimum interest coverage ratio of 3.0 , which is defined in the Credit Agreement as Consolidated EBITDA (as defined in the Credit Agreement) divided by interest expense (as defined in the Credit Agreement).

The Credit Agreement also contains covenants including limitations on asset sales, investments, indebtedness and liens.

5 unchanged sentences

2015-15, 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 Credit Agreement.

Equipment Notes

2 unchanged sentences

Each Equipment Note executed under the Master Loan Agreement constitutes a separate, distinct and independent financing of equipment and a contractual obligation of the Company, which may contain prepayment clauses.

As of December 31, 2019, the Company had nine Equipment Notes outstanding under the Master Loan Agreement that are collateralized by equipment and vehicles owned by the Company.

As of December 31, 2020, the Company had four Equipment Notes outstanding under the Master Loan Agreement that are collateralized by equipment and vehicles owned by the Company.

The following table sets forth our remaining principal payments for the Company’s outstanding Equipment Notes as of December 31, 2020:

24 unchanged sentences

The components of the Company’s revenue by contract type were as follows for the year ended December 31:

(dollars in thousands)

T&D C&I Total

(dollars in thousands) Amount Percent Amount Percent Amount Percent

Fixed price $ 507,203 43.9 % $ 902,134 82.5 % $ 1,409,337 62.7 %

Unit price 338,326 29.3 77,144 7.1 415,470 18.5

T&E 285,158 24.7 72,560 6.6 357,718 15.9

Other 23,691 2.1 41,176 3.8 64,867 2.9

$ 1,154,378 100.0 % $ 1,093,014 100.0 % $ 2,247,392 100.0 %

T&D C&I Total

(dollars in thousands) Amount Percent Amount Percent Amount Percent

Fixed price $ 564,251 49.7 % $ 704,743 75.2 % $ 1,268,994 61.3 %

Unit price 228,223 20.1 54,433 5.8 282,656 13.6

T&E 316,943 27.9 101,770 10.9 418,713 20.2

Other 24,994 2.3 75,802 8.1 100,796 4.9

$ 1,134,411 100.0 % $ 936,748 100.0 % $ 2,071,159 100.0 %

T&D C&I Total

(dollars in thousands) Amount Percent Amount Percent Amount Percent

Fixed price $ 361,699 40.5 % $ 452,732 71.0 % $ 814,431 53.2 %

Unit price 181,179 20.3 51,590 8.1 232,769 15.2

T&E 305,581 34.2 34,938 5.4 340,519 22.2

Other 44,649 5.0 98,801 15.5 143,450 9.4

$ 893,108 100.0 % $ 638,061 100.0 % $ 1,531,169 100.0 %

The components of the Company’s revenue by market type were as follows for the year ended December 31:

(dollars in thousands)

Electrical construction

2020 2019 2018

(dollars in thousands) Segment Amount Percent Amount Percent Amount Percent

Transmission T&D $ 745,599 33.2 % $ 772,609 37.3 % $ 559,467 36.5 %

Distribution T&D 408,779 18.2 361,802 17.5 333,641 21.8

Electrical construction C&I 1,093,014 48.6 936,748 45.2 638,061 41.7

Total revenue $ 2,247,392 100.0 % $ 2,071,159 100.0 % $ 1,531,169 100.0 %

3 unchanged sentences

The following table summarizes that amount of remaining performance obligations as of December 31, 2020 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 as of

December 31, 2019

(in thousands)

Amount estimated to not be

Remaining Performance Obligations as of December 31, 2020

(in thousands) Total Amount estimated to not be

recognized within 12 months

T&D $ 645,422 $ 184,526

C&I 889,596 208,519

Total $ 1,535,018 $ 393,045

The Company expects a vast majority of the remaining performance obligations to be recognized within twenty-four months, although the timing of the Company’s performance is not always under its control.

4 unchanged sentences

(in thousands) 2020 2019 2018

Federal $ 77,195 $ 46,445 $ 48,393

Foreign 4,190 3,997 ( 5,325 )

$ 81,385 $ 50,442 $ 43,068

Income tax expense consisted of the following for the years ended December 31:

(in thousands) 2020 2019 2018

Federal $ 19,014 $ 6,976 $ 5,155

State 6,363 3,562 3,310

25,377 10,538 8,465

Federal ( 2,519 ) 3,010 4,936

Foreign 963 874 ( 822 )

State ( 1,195 ) ( 194 ) ( 805 )

( 2,751 ) 3,690 3,309

Income tax expense $ 22,626 $ 14,228 $ 11,774

1 unchanged sentence

federal statutory tax rate and the Company’s effective tax rate for operations were as follows for the years ended December 31:

2020 2019 2018

U.S federal statutory rate 21.0 % 21.0 % 21.0 %

Deferred balance adjustments due to Tax Act, net

State income taxes, net of U.S.

1 unchanged sentence

Change in valuation allowance 0.1 ( 0.3 ) 1.2

Domestic production/manufacturing deduction

Tax differential on foreign earnings — 0.4 ( 0.5 )

Deferred state tax adjustments, net

Non-deductible meals and entertainment 0.4 0.8 0.8

12 unchanged sentences

Stock-based awards 1,300 1,164

Bonus 7,554 4,904

Operating lease liabilities 5,715 5,850

operating loss 3,601 5,499

Other 7,250 3,439

Total deferred income tax assets before valuation allowances 30,214 25,956

6 unchanged sentences

deferred income tax liabilities ( 1,322 ) ( 2,280 )

Other ( 2,564 ) ( 2,187 )

Total deferred income tax liabilities ( 45,987 ) ( 44,393 )

6 unchanged sentences

The Company is subject to taxation in various jurisdictions.

The Company’s 2017 and 2018 tax returns are subject to examination by U.

The Company’s 2017 through 2019 tax returns are subject to examination by U.

federal authorities.

2 unchanged sentences

If recognized, the entire amount of unrecognized tax benefits would favorably impact the effective tax rate that is reported in future periods.

The decrease in the unrecognized tax benefits as of December 31, 2019 was primarily due to the settlement of an Internal Revenue Service audit for the 2016 tax year and the lapses in the applicable status of limitations.

The increase in the unrecognized tax benefits as of December 31, 2020 was primarily due to revaluation of the likelihood of the uncertain tax positions.

The total unrecognized tax benefits is expected to be reduced by less than $ 0.1 million within the next 12 months.

6 unchanged sentences

Reductions in tax positions due to lapse of statutory limitations ( 16 ) ( 118 )

Reclass from unrecognized tax benefits to deferred tax liability

Balance at end of period 353 152

5 unchanged sentences

Purchase Commitments

As of December 31, 2019, the Company had approximately $5.4 million in outstanding purchase orders for certain construction equipment, with cash outlay scheduled to occur over the next three months.

As of December 31, 2020, the Company had approximately $ 9.5 million in outstanding purchase orders for certain construction equipment, with cash outlay scheduled to occur over the next nine months .

Insurance and Claims Accruals

1 unchanged sentence

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 deductibles of up to $0.2 million for qualified individuals.

Losses up to the deductible 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 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.

3 unchanged sentences

Balance at beginning of period $ 66,804 $ 54,039

Net increases in reserves

Net increases in accrued self-insurance 38,064 45,419

Net payments made ( 35,045 ) ( 32,654 )

4 unchanged sentences

The Company has indemnified its sureties for any expenses paid out under these bonds.

As of December 31, 2019, an aggregate of

approximately $902.0 million in original face amount of bonds issued by the Company’s sureties were outstanding.

As of December 31, 2020, an aggregate of approximately $ 1.33 billion in original face amount of bonds issued by the Company’s sureties were outstanding.

Our estimated remaining cost to complete these bonded projects was approximately $ 629.1 million as of December 31, 2020.

20 unchanged sentences

Stock-Based Compensation

The Company maintains two equity compensation plans under which stock-based compensation has been granted, the 2017 Long-Term Incentive Plan, (the “LTIP”) and the 2007 Long-Term Incentive Plan (Amended and Restated as of May 1, 2014) (the “2007 LTIP” and, collectively with the LTIP, the “Long-Term Incentive Plans”).

Upon the adoption of the LTIP, awards were no longer granted under the 2007 LTIP.

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” and, collectively with the LTIP, the “Long-Term Incentive Plans”).

Upon the initial adoption of the LTIP in 2017, awards were no longer granted under the 2007 LTIP.

The LTIP was approved by our stockholders and provides for grants of (a) incentive stock options qualified as such under U.S.

2 unchanged sentences

Grants of awards to employees are approved by the Compensation Committee of the Board of Directors and grants to independent members of the Board of Directors are approved by the Board of Directors.

All awards are made with an exercise price or base price, as the case may be, that is not less than the full fair market value per share on the date of grant.

All awards are made with an

exercise price or base price, as the case may be, that is not less than the full fair market value per share on the date of grant.

No stock option or stock appreciation right may be exercised more than 10 years from the date of grant.

Ordinarily the number of restricted stock awards and ROIC-based performance share awards are determined by dividing the amount of the equity compensation award allocated to each award type, by the closing price of the Company’s common stock on the date of the grant.

However, as a result of the negative impact of the COVID-19 pandemic on the Company’s stock price during late March and early April of 2020, the Company’s compensation committee elected to utilize the Company's average closing stock price during the last 30 trading days of 2019 to determine the number of restricted stock and ROIC-based performance shares granted in 2020.

The use of this 30 -trading day average resulted in the utilization of an average stock price of $ 33.57 , instead of the grant date closing stock price of $ 26.75 .

Shares issued as a result of stock option exercises or stock grants are made available from authorized unissued shares of common stock or treasury stock.

4 unchanged sentences

All stock options were fully expensed as of December 31, 2017.

Following is a summary of stock option activity for the three-year period ending December 31, 2019:

Following is a summary of stock option activity for the three-year period ended December 31, 2020:

Options Weighted-

Price Weighted-

Term Aggregate

(in thousands)

Outstanding at January 1, 2018

Outstanding and Exercisable at December 31, 2017

Outstanding and Exercisable at December 31, 2018

Outstanding and Exercisable at December 31, 2019

165,920 $ 21.92

Exercised ( 88,053 ) $ 21.54

Expired ( 1,103 ) $ 21.16

Outstanding and Exercisable at December 31, 2018 76,764 $ 22.33 2.9 years $ 446

Exercised ( 14,743 ) $ 23.16

Expired ( 2,435 ) $ 19.86

Outstanding and Exercisable at December 31, 2019 59,586 $ 22.26 2.2 years $ 352

Exercised ( 34,388 ) $ 21.82

Expired ( 641 ) $ 19.66

Outstanding and Exercisable at December 31, 2020 24,557 $ 22.94 1.9 years $ 912

During the years ended December 31, 2020, 2019 and 2018, the intrinsic value of stock options exercised was $ 0.7 million, $ 0.2 million and $ 1.3 million, respectively.

1 unchanged sentence

Options Outstanding and Exercisable

Exercise Price

$17.18 – $17.18

Exercise Price Number Of Options Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term

$ 17.48 – $ 17.48

5,817 $ 17.48 1.2 years

$ 24.18 – $ 24.18

1,577 $ 24.18 0.2 years

$ 24.68 – $ 24.68

17,163 $ 24.68 2.2 years

24,557 $ 22.94 1.9 years

Time-Vested Stock Awards

1 unchanged sentence

The grant date fair value of the time-vested stock awards is equal to the closing market price of the Company’s common stock on the date of grant.

Time-vested stock awards granted under the LTIP to eligible employees in 2019 generally vest ratably, on an annual basis, over three years.

Time-vested stock awards granted under the LTIP to eligible employees in 2020 vest ratably on April 27, 2021, March 23, 2022 and March 23, 2023.

Time-vested stock awards granted under the LTIP to non-employee directors in 2020 vest over a one year period.

The Company recognizes stock-based compensation expense related to restricted stock awards, phantom stock awards and 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 Company recognizes stock-based compensation expense related to restricted stock awards and 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 time-vested stock awards granted to eligible employees and one year for non-employee directors.

During the years ended December 31, 2020, 2019 and 2018, time-vested stock vesting activity settled in common stock had an intrinsic value, at the time of vesting, of $ 2.5 million, $ 3.4 million and $ 3.0 million, respectively.

Following is a summary of time-vested stock awards activity for the three-year period ending December 31, 2019:

Following is a summary of time-vested stock awards activity for the three-year period ended December 31, 2020:

Shares Per Share Weighted- Average

Outstanding unvested at January 1, 2018

188,648 $ 29.55

Granted 93,280 $ 30.22

Vested ( 96,840 ) $ 28.91

Forfeited ( 9,657 ) $ 27.02

Outstanding unvested at December 31, 2018 175,431 $ 30.40

Granted 85,640 $ 34.22

Vested ( 99,655 ) $ 30.51

Forfeited ( 3,034 ) $ 35.88

Outstanding unvested at December 31, 2019 158,382 $ 32.29

Granted 104,857 $ 26.75

Vested ( 93,669 ) $ 32.09

Forfeited ( 3,781 ) $ 29.80

Outstanding unvested at December 31, 2020 165,789 $ 28.96

5 unchanged sentences

Performance awards cliff vest upon attainment of at least the minimum stated performance targets and minimum service requirements and are paid in the Company’s common stock.

During 2018, management concluded that it was probable that the minimum performance threshold would not be met for certain performance shares that were granted during 2017 and 2016.

As a result, in the year ended December 31, 2018, the Company reversed $0.7 million in stock compensation from previous accruals.

For performance awards, the Company recognizes stock-based compensation expense based on the grant date fair value of the award.

1 unchanged sentence

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.

Performance awards granted in 2020 are expensed over the service period of approximately 2.7 years.

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.

1 unchanged sentence

During the years ended December 31, 2020, 2019 and 2018, performance award vesting activity settled in common stock had an intrinsic value, at the time of vesting, of $ 4.8 million, $ 0.2 million and $ 1.0 million, respectively.

Following is a summary of performance share award activity for the three-year period ending December 31, 2019:

Following is a summary of performance share award activity for the three-year period ended December 31, 2020:

Shares Per Share Weighted- Average

Outstanding at January 1, 2018

126,975 $ 35.29

Granted at target 66,764 $ 34.52

Forfeited for performance below target ( 42,584 ) $ 29.73

Vested ( 29,655 ) $ 33.35

Forfeited ( 9,247 ) $ 30.85

Outstanding at December 31, 2018 112,253 $ 39.73

1 unchanged sentence

Forfeited for performance below target ( 36,581 ) $ 48.94

Vested ( 8,854 ) $ 58.34

Forfeited ( 1,505 ) $ 43.43

Outstanding at December 31, 2019 138,245 $ 37.02

Granted at target 79,788 $ 34.10

Forfeited for performance below target

Earned for performance above target, net 14,962 $ 69.45

Vested ( 78,260 ) $ 48.86

Forfeited ( 4,396 ) $ 36.28

Outstanding at December 31, 2020 150,339 $ 36.54

1 unchanged sentence

The Company recognized stock-based compensation expense of approximately $ 5.7 million, $ 4.4 million and $ 3.2 million for the years ended December 31, 2020, 2019 and 2018, respectively, in selling, general and administrative expenses on the Company’s consolidated statements of operations.

As of December 31, 2019, there was approximately $5.4 million of unrecognized stock-based compensation expense related to awards granted under the Plans.

As of December 31, 2020, there was approximately $ 6.9 million of unrecognized stock-based compensation expense related to awards granted under the Long-Term Incentive Plans.

This included $ 2.9 million of unrecognized compensation cost related to unvested time-vested stock awards expected to be recognized over a remaining weighted average vesting period of approximately 1.5 years and $ 4.0 million of unrecognized compensation cost related to unvested performance awards, expected to be recognized over a remaining weighted average vesting period of approximately 1.5 years.

20 unchanged sentences

Department of Labor website.

The PPA zone status for the plan year ended on December 31, 2019 has not been listed because Forms 5500 were not yet

The PPA zone status for the plan year ended on December 31, 2020 has not been listed because Forms 5500 were not yet available.

Among other factors, plans in the red “critical” zone are generally less than 65 percent funded, plans in the yellow “endangered” zone are between 65 and 80 percent funded, and plans in the green zone are at least 80 percent funded.

1 unchanged sentence

Information in the table has been presented separately for individually significant plans and in the aggregate for all other plans.

Pension Protection Act Zone Status

Contributions to Plan for the

Year Ended December 31,

Pension Fund EIN/Pension

Plan Number Pension Protection Act Zone Status Contributions to Plan for the Year ended December 31, Funding

Plan Surcharge

Status Plan Year

End Status Plan Year

End 2020 2019 2018

(in thousands)

Defined Benefit Plans:

Southern California IBEW-NECA Pension Trust Fund

95-6392774 001

National Electrical Benefit Fund

53-0181657 001

Southern California IBEW-NECA Pension Trust Fund 95-6392774 001 Yellow 6/30/2019 Yellow 6/30/2018 $ 32,791 $ 14,268 $ 767 Yes Yes

National Electrical Benefit Fund 53-0181657 001 Green 12/31/2019 Green 12/31/2018 10,850 11,050 9,840 No No

Eighth District Electrical Pension

84-6100393 001

IBEW Local 769 Management Pension Plan A

86-6049763 001

Fund 84-6100393 001 Green 3/31/2020 Green 3/31/2019 10,998 11,199 9,707 No No

IBEW Local 332 Pension Plan Part A 94-2688032 004 Green 12/31/2019 Green 12/31/2018 3,418 1,913 — No No

IBEW Local 769 Management Pension Plan A 86-6049763 001 Green 6/30/2019 Green 6/30/2018 3,866 2,689 2,587 No No

IBEW Local No.

640 and Arizona NECA Defined Benefit Pension

86-0323980 001

Plan 86-0323980 001 Green 12/31/2019 Green 12/31/2018 1,195 2,397 1,629 No No

IBEW Local Union 1249 Pension Fund 15-6035161 001 Green 12/31/2019 Green 12/31/2018 2,126 1,578 881 No No

Indiana/Kentucky/Ohio Regional Council of Carpenters Pension

51-6123713 001

Alaska Electrical Pension Plan

92-6005171 001

Fund 51-6123713 001 Green 6/30/2019 Green 6/30/2018 2,109 1,742 1,157 No No

Alaska Electrical Pension Plan 92-6005171 001 Green 12/31/2019 Green 12/31/2018 1,548 1,408 2,723 No No

Defined Contribution Plans:

National Electrical Annuity Plan

52-6132372 001

Eighth District Electrical Pension Fund Annuity Plan

84-6100393 002

National Electrical Annuity Plan 52-6132372 001 n/a n/a 25,037 28,822 26,559 n/a n/a

Eighth District Electrical Pension Fund Annuity Plan 84-6100393 002 n/a n/a 4,915 5,339 4,785 n/a n/a

San Mateo Country Electrical Construction Industry Retirement Plan 51-6052127 001 n/a n/a 3,202 854 — n/a n/a

Puget Sound Electrical Workers 401(K) Savings Plan 91-6180326 001 n/a n/a 2,132 1,833 967 n/a n/a

All other plans:

17,663 17,117 8,818

Total contributions:

$ 121,850 $ 102,209 $ 70,420

Total contributions to these plans, at any given time, correspond to the number of union employees employed and the plans in which they participate, which varies depending upon location, the number of ongoing projects and the need for union resources in connection with such projects at a given time.

The PPA data presented in the table above represents data available to us for the two most recent plan years.

One of the Company’s subsidiaries was also in the Eighth District Electrical Pension Fund’s Form 5500 as providing more than five percent of the total contributions to that plan for the plan years ended March 31, 2019, 2018 and 2017, in the IBEW local 769 Management Pension Plan A’s Form 5500 as providing more than five percent of the total contributions to that plan for the plan years ended June 30, 2018 and 2017 and in the IBEW Local No.

One of the Company’s subsidiaries was listed in the Eighth District Electrical Pension Fund’s Form 5500 as providing more than five percent of the total contributions to that plan for the plan years ended March 31, 2020, 2019 and 2018, in the IBEW local 769 Management Pension Plan A’s Form 5500 as providing more than five percent of the total contributions to that plan for the plan years ended June 30, 2019 and 2018 and in the IBEW Local No.

640 and Arizona NECA Defined Benefit Pension Plan’s Form 5500 as providing more than five percent of the total contributions to that plan for the plan years ended December 31, 2019 and 2018.

6 unchanged sentences

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.

3 unchanged sentences

The C&I segment provides services including the design, installation, maintenance and repair of commercial and industrial wiring, installation of traffic networks and the installation of bridge, roadway and tunnel lighting.

Typical C&I contracts cover electrical contracting services for airports, hospitals, data centers, hotels, stadiums, convention centers, renewable energy projects, manufacturing plants, processing facilities, waste-water treatment facilities, mining facilities and transportation control and management systems.

Typical C&I contracts cover electrical contracting services for airports, hospitals, data centers, hotels, stadiums, convention centers, renewable energy projects, manufacturing plants, processing facilities, 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.

3 unchanged sentences

Contract revenues:

T&D $ 1,154,378 $ 1,134,411 $ 893,108

C&I 1,093,014 936,748 638,061

$ 2,247,392 $ 2,071,159 $ 1,531,169

Income from operations:

T&D $ 109,387 $ 73,580 $ 57,242

C&I 37,247 30,506 34,112

General Corporate ( 60,089 ) ( 46,908 ) ( 41,042 )

$ 86,545 $ 57,178 $ 50,312

The Company does not identify capital expenditures and total assets by segment in its internal financial reports due in part to the shared use of a centralized fleet of vehicles and specialized equipment.

1 unchanged sentence

(in thousands) 2020 2019

T&D $ 269,721 $ 306,226

C&I 413,910 414,264

General Corporate 312,228 287,381

$ 995,859 $ 1,007,871

An allocation of total depreciation, including depreciation of shared construction equipment, and amortization to each segment is as follows:

2 unchanged sentences

Depreciation and amortization

For the years ended December 31, 2019, 2018 and 2017 the Company had Canadian contract revenues of $79.5 million, $53.8 million and $84.1 million, respectively.

Canadian contract revenues for the years ended December 31, 2019, 2018 and 2017 were predominantly in the C&I segment.

T&D $ 37,254 $ 35,711 $ 33,977

C&I 9,199 8,805 5,936

$ 46,453 $ 44,516 $ 39,913

For the years ended December 31, 2020, 2019 and 2018 the Company had Canadian contract revenues of $ 77.9 million, $ 79.5 million and $ 53.8 million, respectively, predominantly in the C&I segment.

As of December 31, 2020 and 2019, there were $ 23.2 million and $ 24.8 million, respectively, of identifiable assets attributable to Canadian operations.

6 unchanged sentences

Additionally, there have been no changes in ownership during the year ended December 31, 2020, and the underlying project was substantially completed in 2019.

The balance of the Company’s noncontrolling interest consists of the preliminary fair value of noncontrolling interest acquired on July 2, 2018 with the Huen Companies.

Net loss attributable to the noncontrolling interest, subsequent to the acquisition through December 31, 2019, was $1.5 million.

The initial balance of the Company’s noncontrolling interest consists of the fair value of noncontrolling interest acquired on July 2, 2018 with the Huen Companies.

The Company recognized no net income or (loss) attributable to the noncontrolling interest during the year ended December 31, 2020.

The Company recognized $ 1.5 million of net loss attributable to the noncontrolling interest during the year ended December 31, 2019.

Earnings Per Share

10 unchanged sentences

(in thousands, except per share data) 2020 2019 2018

Net income $ 58,759 $ 36,214 $ 31,294

net income (loss) attributable to noncontrolling interest — ( 1,476 ) 207

Net income attributable to MYR Group Inc.

$ 58,759 $ 37,690 $ 31,087

Weighted average common shares outstanding 16,684 16,587 16,441

2 unchanged sentences

Net income per share attributable to MYR Group Inc.:

Basic $ 3.52 $ 2.27 $ 1.89

Diluted $ 3.48 $ 2.26 $ 1.87

For the years ended December 31, 2020, 2019 and 2018, certain common stock equivalents were excluded from the calculation of dilutive securities because their inclusion would either have been anti-dilutive or, for stock options, the exercise prices of those stock options were greater than the average market price of the Company’s common stock for the period.

5 unchanged sentences

Share Repurchase Program

During 2019 and 2018, the Company repurchased 23,103 and 32,857 shares of stock, respectively, for approximately $0.8 million and $1.0 million, respectively, from its employees to satisfy tax obligations on shares vested under the Plans.

On October 22, 2020, the Company’s Board of Directors authorized a new $ 50.0 million share repurchase program which became effective on November 2, 2020.

The Company intends to fund the share repurchase program from cash on hand and through borrowings under its credit facility.

The new share repurchase program will expire on November 2, 2021, or when the authorized funds are exhausted, whichever is earlier.

No shares were repurchased under the new program in 2020.

The remaining availability to purchase shares under the Repurchase Program was $ 50.0 million as of December 31, 2020.

During 2020 and 2019, the Company repurchased 24,910 and 23,103 shares of stock, respectively, for approximately $ 0.7 million and $ 0.8 million, respectively, from its employees to satisfy tax obligations on shares vested under the Long-Term Incentive Plans.

All of the shares repurchased were retired and returned to authorized but unissued stock.

2 unchanged sentences

For the Three Months Ended

(in thousands, except per share data)

September 30,

(in thousands, except per share data) March 31, June 30, September 30, December 31,

Revenues $ 518,470 $ 513,051 $ 607,901 $ 607,970

Gross profit 61,632 61,305 76,472 76,444

Net income attributable to MYR Group 9,932 13,385 17,292 18,150

Basic earnings per share attributable to MYR Group (1)

$ 0.60 $ 0.80 $ 1.04 $ 1.09

Diluted earnings per share attributable to MYR Group (1)

$ 0.59 $ 0.80 $ 1.02 $ 1.07

Revenues $ 468,094 $ 448,776 $ 583,214 $ 571,075

Gross profit 42,876 43,163 59,197 68,922

Net income attributable to MYR Group 7,353 7,207 10,355 12,775

Basic earnings per share attributable to MYR Group (1)

$ 0.45 $ 0.43 $ 0.62 $ 0.77

Diluted earnings per share attributable to MYR Group (1)

$ 0.44 $ 0.43 $ 0.62 $ 0.76

___________________________________________

(1) Earnings per share amounts for each quarter are required to be computed independently using the weighted average number of shares outstanding during the period.

As a result, the sum of the individual quarterly earnings per share amounts may not agree to the earnings per share calculated for the year.

TABLE OF CONTENTS

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data