What changed in this filing

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Item 1. Financial Statements

2021-04-28 compared with 2020-10-28 · 108 added, 249 removed, 479 unchanged (43% of the section changed)

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data) September 30,

(in thousands, except share and per share data) March 31,

2021 December 31,

(unaudited)

Current assets:

32 unchanged sentences

Operating lease obligations, net of current maturities 14,787 15,730

Finance lease obligations, net of current maturities — 338

Other liabilities 19,742 18,631

4 unchanged sentences

4,000,000 authorized shares;

none issued and outstanding at September 30, 2020 and December 31, 2019

none issued and outstanding at March 31, 2021 and December 31, 2020

Common stock—$ 0.01 par value per share;

100,000,000 authorized shares;

16,719,330 and 16,648,616 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively

16,817,256 and 16,734,239 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively

Additional paid-in capital 157,995 158,618

Accumulated other comprehensive loss ( 403 ) ( 446 )

Accumulated other comprehensive income 276 23

Retained earnings 290,021 270,480

8 unchanged sentences

Three months ended

September 30, Nine months ended

September 30,

(in thousands, except per share data) 2021 2020

13 unchanged sentences

Net income $ 19,928 $ 9,932

net income (loss) attributable to noncontrolling interest — 106 — ( 1,476 )

Net income attributable to MYR Group Inc.

$ 17,292 $ 10,355 $ 40,609 $ 24,915

Income per common share attributable to MYR Group Inc.:

Income per common share:

—Basic $ 1.19 $ 0.60

4 unchanged sentences

Net income $ 19,928 $ 9,932

Other comprehensive income (loss):

Other comprehensive income:

Foreign currency translation adjustment 253 87

Other comprehensive income (loss):

( 5 ) 1 43 ( 199 )

Other comprehensive income:

Total comprehensive income $ 20,181 $ 10,019

net income (loss) attributable to noncontrolling interest — 106 — ( 1,476 )

Total comprehensive income attributable to MYR Group Inc.

$ 17,287 $ 10,356 $ 40,652 $ 24,716

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

7 unchanged sentences

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

Net income (loss) — — — — — 7,353 7,353 ( 733 ) 6,620

Stock issued under compensation plans, net — 68 — 282 — — 282 — 282

Stock-based compensation expense — — — 951 — — 951 — 951

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

Other comprehensive loss — — — — ( 77 ) — ( 77 ) — ( 77 )

Stock issued - other — — 12 — — — 12 — 12

Balance at March 31, 2019 — 16,610 177 148,938 ( 270 ) 181,882 330,727 747 331,474

Net income (loss) — — — — — 7,207 7,207 ( 849 ) 6,358

Stock issued under compensation plans, net — 33 1 1 — — 2 — 2

Stock-based compensation expense — — — 1,202 — — 1,202 — 1,202

Other comprehensive income — — — — ( 123 ) — ( 123 ) — ( 123 )

Stock issued - other — 1 ( 12 ) 36 — — 24 — 24

Balance at June 30, 2019 — 16,644 166 150,177 ( 393 ) 189,089 339,039 ( 102 ) 338,937

Net income — — — — — 9,932 9,932 — 9,932

Stock issued under compensation plans, net — — — 41 — — 41 — 41

Stock-based compensation expense — 2 — 1,108 — — 1,108 — 1,108

Other comprehensive income — — — — 1 — 1 — 1

Stock issued - other — 1 — 24 — — 24 — 24

Balance at September 30, 2019 $ — 16,647 $ 166 $ 151,350 $ ( 392 ) $ 199,444 $ 350,568 $ 4 $ 350,572

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

Net income — — — — — 9,932 9,932 — 9,932

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

5 unchanged sentences

Balance at March 31, 2020 $ — 16,685 $ 166 $ 153,477 $ ( 359 ) $ 221,698 $ 374,982 $ 4 $ 374,986

Net income — — — — — 13,385 13,385 — 13,385

Stock issued under compensation plans, net — 23 1 — — — 1 — 1

Stock-based compensation expense — — — 1,093 — — 1,093 — 1,093

Other comprehensive income — — — — ( 39 ) — ( 39 ) — ( 39 )

Stock issued - other — 1 — 24 — — 24 — 24

Balance at June 30, 2020 — 16,709 167 154,594 ( 398 ) 235,083 389,446 4 389,450

Balance at December 31, 2020 — 16,734 $ 167 $ 158,618 $ 23 $ 270,480 $ 429,288 $ 4 $ 429,292

Net income — — — — — 19,928 19,928 — 19,928

1 unchanged sentence

Stock-based compensation expense — — — 1,487 — — 1,487 — 1,487

Shares repurchased — ( 41 ) — ( 2,231 ) — ( 387 ) ( 2,618 ) — ( 2,618 )

Other comprehensive income — — — — 253 — 253 — 253

Stock issued - other — 1 — 12 — — 12 — 12

Balance at September 30, 2020 $ — 16,719 $ 167 $ 156,461 $ ( 403 ) $ 252,375 $ 408,600 $ 4 $ 408,604

Balance at March 31, 2021 $ — 16,817 $ 168 $ 157,995 $ 276 $ 290,021 $ 448,460 $ 4 $ 448,464

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

1 unchanged sentence

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine months ended

September 30,

Three months ended

(in thousands) 2021 2020

20 unchanged sentences

Proceeds from sale of property and equipment 651 870

Cash paid for acquired business — ( 79,720 )

Purchases of property and equipment ( 7,031 ) ( 9,138 )

1 unchanged sentence

Cash flows from financing activities:

Net borrowings (repayments) under revolving lines of credit ( 65,189 ) 67,668

Borrowings under equipment notes — 24,037

Net repayments under revolving lines of credit — ( 2,263 )

Payment of principal obligations under equipment notes — ( 2,177 )

1 unchanged sentence

Proceeds from exercise of stock options 110 82

Debt refinancing costs — ( 1,132 )

Repurchase of common shares ( 2,618 ) ( 425 )

Other financing activities 12 23

Net cash flows provided by (used in) financing activities ( 96,604 ) 86,016

Net cash flows used in financing activities ( 2,769 ) ( 5,072 )

Effect of exchange rate changes on cash 160 ( 303 )

29 unchanged sentences

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

Since March of 2020, the COVID-19 pandemic has had a significant impact on the global economy, including the US and Canadian economies.

As the situation continues to evolve, the Company is closely monitoring the impact of the COVID-19 pandemic on all aspects of our business, including how it impacts our customers, subcontractors, suppliers, vendors and employees.

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.

1 unchanged sentence

We expect the project-specific requirements to remain in place which will continue to impact project schedules and workflow going forward.

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.

Most of the Company’s operations are considered critical and essential businesses, making our projects generally exempt from stay-at-home or similar orders in certain parts of the United States and western Canada.

However, if this pandemic persists for an extended timeframe our business could be more significantly impacted as a result of prolonged unfavorable economic conditions.

The Company began implementing changes in March of 2020 in an effort to protect our employees and customers and to support appropriate health and safety protocols, including implementing alternative and flexible work arrangements where possible.

As the conditions surrounding the ongoing COVID-19 pandemic remain fluid, and if disruptions do re-emerge, they could materially adversely impact our business.

The 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.

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

Basis of Presentation

6 unchanged sentences

In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary to fairly state the financial position, results of operations, comprehensive income, stockholders’ equity and cash flows with respect to the interim consolidated financial statements, have been included.

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

The consolidated balance sheet as of December 31, 2020 has been derived from the audited financial statements as of that date.

1 unchanged sentence

These financial statements should be read in conjunction with the audited financial statements and related notes for the year ended December 31, 2020, included in the Company’s Annual Report on Form 10-K, which was filed with the SEC on March 3, 2021 (the "2020 Annual Report").

Joint Ventures and Noncontrolling Interests

The Company accounts for investments in joint ventures using the proportionate consolidation method for income statement reporting and under the equity method for balance sheet reporting, unless the Company has a controlling interest causing the joint venture to be consolidated with equity owned by other joint venture partners recorded as noncontrolling interests.

Under the proportionate consolidation method, joint venture activity is allocated to the appropriate line items found on the consolidated statements of operations in proportion to the percentage of participation the Company has in the joint venture.

Under the equity method the net investment in joint ventures is stated as a single item on the Company’s consolidated balance sheets.

If an investment in a joint venture contains a recourse or unfunded commitments to provide additional equity, distributions and/or losses in excess of the investment a liability is recorded in other current liabilities on the Company’s consolidated balance sheets.

For joint ventures which the Company does not have a controlling interest, the Company’s share of any profits and assets and its share of any losses and liabilities are recognized based on the Company’s stated percentage partnership interest in the joint venture, and are normally recorded by the Company one month in arrears.

The investments in joint ventures are recorded at cost and the carrying amounts are adjusted to recognize the Company’s proportionate share of cumulative income or loss, additional contributions made and dividends and capital distributions received.

The Company records the effect of any impairment or any other-than-temporary decrease in the value of the joint venture investment as incurred, which may or may not be one month in arrears, depending on when the Company obtains the joint venture activity information.

Additionally, the Company continually assesses the fair value of its investment in unconsolidated joint ventures despite using information that is one month in arrears for regular reporting purposes.

The Company includes only its percentage ownership of each joint venture in its backlog.

The Company is the majority controlling interest in a joint venture.

As a result, the Company has consolidated the carrying value of the joint ventures’ assets and liabilities and results of operations in the Company’s consolidated financial statements.

The equity owned by the other joint venture partners has been recorded as noncontrolling interest in the Company’s consolidated balance sheets, consolidated statements of stockholders’ equity, and their portions, if material, of net income (loss) and other comprehensive income shown as net income or other comprehensive income attributable to noncontrolling interest in the Company’s consolidated statements of operations and other comprehensive income.

Additionally, the joint venture associated with the Company’s noncontrolling interest is a partnership, and consequently, the tax effect of only the Company’s share of the joint venture income is recognized by the Company.

The majority controlled joint venture made no distributions to its partners, and the Company made no capital contributions to the joint venture, during the three months ended March 31, 2021.

Additionally, there have been no changes in ownership during the three months ended March 31, 2021.

The project associated with this joint venture was substantially completed in 2019.

Foreign Currency

5 unchanged sentences

Cumulative translation adjustments are included as a separate component of accumulated other comprehensive income in shareholders’ equity.

Foreign currency transaction gains and losses, arising primarily from changes in exchange rates on short-term monetary assets and liabilities, and ineffective long-term monetary assets and liabilities are recorded in the “other income, net” line on the consolidated statements of operations.

Foreign currency gains, recorded in other income, net, for the nine months ended September 30, 2020 were no t significant.

Foreign currency gains, recorded in other income, net, for the nine months ended September 30, 2019 were $ 0.1 million.

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

Foreign currency losses and gains, recorded in other income, net, for the three months ended March 31, 2021 and 2020 were no t significant.

Use of Estimates

4 unchanged sentences

The Company estimates a cost accrual every quarter that represents costs incurred but not invoiced for services performed or goods delivered during the period, and estimates revenue from the contract cost portion of these accruals based on current gross margin rates to be consistent with its cost method of revenue recognition.

As of September 30, 2020 and 2019, the Company had recognized revenues of $ 19.1 million and $ 31.1 million, respectively, related to significant change orders and/or claims that had been included as contract price adjustments on certain contracts, some of which are multi-year projects.

As of March 31, 2021 and 2020, the Company had recognized revenues of $ 14.0 million and $ 36.4 million, respectively, related to significant change orders and/or claims that had been included as contract price adjustments on certain contracts, some of which are multi-year projects.

These change orders and/or claims are in the process of being negotiated in the normal course of business, and a portion of these recognized revenues had been included in multiple periods.

The cost-to-cost method of accounting requires the Company to make estimates about the expected revenue and gross profit on each of its contracts in process.

During the three months ended September 30, 2020, changes in estimates pertaining to certain projects decreased consolidated gross margin by 0.3 %, which resulted in decreases in operating income of $ 1.9 million, net income attributable to MYR Group Inc.

of $ 1.5 million and diluted earnings per common share attributable to MYR Group Inc.

During the nine months ended September 30, 2020, changes in estimates pertaining to certain projects decreased consolidated gross margin by 0.4 %, which resulted in decreases in operating income of $ 7.6 million, net income attributable to MYR Group Inc.

of $ 5.5 million and diluted earnings per common share attributable to MYR Group Inc.

During the three months ended September 30, 2019, changes in estimates pertaining to certain projects increased consolidated gross margin by 0.2 %, which resulted in increases in operating income of $ 0.9 million, net income attributable to MYR Group Inc.

of $ 0.8 million and diluted earnings per common share attributable to MYR Group Inc.

During the nine months ended September 30, 2019, changes in estimates pertaining to certain projects decreased consolidated gross margin by 0.5 %, which resulted in decreases in operating income of $ 7.8 million, net income attributable to MYR Group Inc.

of $ 3.3 million and diluted earnings per common share attributable to MYR Group Inc.

During the three months ended March 31, 2021, changes in estimates pertaining to certain projects increased consolidated gross margin by 0.1 %, which resulted in increases in operating income of $ 0.6 million, net income of $ 0.4 million and diluted earnings per common share of $ 0.02 .

During the three months ended March 31, 2020, changes in estimates pertaining to certain projects increased consolidated gross margin by 0.1 %.

These changes in estimates did no t have a significant impact to consolidated operating income, net income or diluted earnings per common share.

Recent Accounting Pronouncements

4 unchanged sentences

Recently Adopted Accounting Pronouncements

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.

Under this guidance, an entity is required to consider a broader range of information to estimate expected credit losses, which may result in earlier recognition of losses.

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.

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 September 30, 2020 and at the time of adopting this ASU were $ 0.5 million and $ 0.4 million, respectively.

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 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.

The guidance is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years, with early adoption permitted.

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

CSI Electrical Contractors, Inc.

On July 15, 2019, the Company completed the acquisition of substantially all the assets of CSI Electrical Contractors, Inc.

(“CSI”), an electrical contracting firm based in California.

CSI provides services to a broad array of end markets under the Company’s C&I segment.

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 finalized the purchase price accounting relating to the acquisition of CSI in 2019.

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

The contracts were valued at fair value at the acquisition date, causing no margin guarantee estimate or adjustments for fair value.

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 $ 0.6 million, all of which occurred prior to June 30, 2020 were recorded in other expense for the nine months ended September 30, 2020.

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

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 three and nine months ended September 30, 2020, the Company recognized $ 1.4 million and $ 2.5 million, respectively, of compensation expense associated with these contingent payments.

The Company adopted this ASU in January 2021 and there was no effect on the consolidated financial statements or disclosures.

Contract Assets and Liabilities

2 unchanged sentences

The Company’s consolidated balance sheets present contract assets, which contain unbilled revenue and contract retainages associated with contract work that has been completed and billed but not paid by customers, pursuant to retainage provisions, that are generally due once the job is completed and approved.

The allowance for doubtful accounts associated with contract assets was $ 0.5 million as of September 30, 2020 and $ 0.1 million as of December 31, 2019.

The allowance for doubtful accounts associated with contract assets was $ 0.4 million as of March 31, 2021 and December 31, 2020.

Contract assets consisted of the following:

(in thousands) September 30,

(in thousands) March 31,

2021 December 31,

4 unchanged sentences

Contract liabilities consisted of the following:

(in thousands) September 30,

(in thousands) March 31,

2021 December 31,

3 unchanged sentences

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

(in thousands) September 30,

(in thousands) March 31,

2021 December 31,

3 unchanged sentences

The difference between the opening and closing balances of the Company’s contract assets and contract liabilities primarily results from the timing of the Company’s billings in relation to its performance of work.

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

The amounts of revenue recognized in the period that were included in the opening contract liability balances were $ 11.9 million and $ 39.4 million for the three and nine months ended September 30, 2019, respectively.

The amounts of revenue recognized in the period that were included in the opening contract liability balances were $ 41.4 million for the three months ended March 31, 2021 and $ 25.7 million for the three months ended March 31, 2020.

This revenue consists primarily of work performed on previous billings to customers.

The net asset position for contracts in process consisted of the following:

(in thousands) September 30,

(in thousands) March 31,

2021 December 31,

3 unchanged sentences

The net asset position for contracts in process is included within the contract asset and contract liability in the accompanying consolidated balance sheets as follows:

(in thousands) September 30,

(in thousands) March 31,

2021 December 31,

9 unchanged sentences

Additionally, all of the Company's month-to-month leases are cancelable, by the Company or the lessor, at any time and are not included in our right-of-use asset or liability.

At September 30, 2020, the Company had several leases with residual value guarantees, due to the acquisition of CSI.

At March 31, 2021, the Company had several leases with residual value guarantees.

Typically, the Company has purchase options on the equipment underlying its long-term leases and many of its short-term rental arrangements.

2 unchanged sentences

The following is a summary of the lease-related assets and liabilities recorded:

September 30,

2021 December 31,

7 unchanged sentences

Operating lease obligations Operating lease obligations, net of current maturities 14,787 15,730

Finance lease obligations Finance lease obligations, net of current maturities — 338

Total non-current obligations 14,787 15,730

1 unchanged sentence

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

September 30,

2021 December 31,

5 unchanged sentences

(in thousands) Three months ended

September 30, Nine months ended

September 30,

2020 2019 2020 2019

Finance lease cost:

2 unchanged sentences

Operating lease cost 2,486 2,231

Short-term lease cost — — — 8

Variable lease costs 76 71

1 unchanged sentence

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

Nine months ended September 30,

Three months ended March 31,

(in thousands) 2021 2020

3 unchanged sentences

Right-of-use asset obtained in exchange for new operating lease obligations $ 1,502 $ 3,024

The future undiscounted minimum lease payments, as reconciled to the discounted minimum lease obligation indicated on the Company’s consolidated balance sheets, under financial leases, less interest, and under operating leases, less imputed interest, as of September 30, 2020 were as follows:

(in thousands) Finance

18 unchanged sentences

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

As of September 30, 2020, the minimum lease payments required under these leases totaled $ 3.6 million, which are due over the next 3.8 years.

As of March 31, 2021, the minimum lease payments required under these leases totaled $ 3.0 million, which are due over the next 3.3 years.

Fair Value Measurements

4 unchanged sentences

and Level 3 (the lowest priority), defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

As of September 30, 2020 and December 31, 2019, the Company determined that the carrying value of cash and cash equivalents approximated fair value based on Level 1 inputs.

As of September 30, 2020, the fair values of the Company’s long-term debt and finance lease obligations were based on Level 2 inputs.

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

The Company’s long-term debt was based on variable and fixed interest rates at September 30, 2020 and December 31, 2019, for new issues with similar remaining maturities, and approximated carrying value.

As of March 31, 2021 and December 31, 2020, the Company determined that the carrying value of cash and cash equivalents approximated fair value based on Level 1 inputs.

As of March 31, 2021 and December 31, 2020, the fair values of the Company’s long-term debt and finance lease obligations were based on Level 2 inputs.

The Company’s long-term debt was based on variable and fixed interest rates at March 31, 2021 and December 31, 2020, for new issues with similar remaining maturities, and approximated carrying value.

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

5 unchanged sentences

Balance as of

September 30, 2020

March 31, 2021

Balance as of

December 31, 2020

Credit Agreement

Revolving loans

9/13/2019 Variable Variable 5 $ 38,630 $ 103,820

Revolving loans 9/13/2019 Variable Variable 5 $ — $ —

Equipment Notes

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 13,596 14,286

Equipment Note 7

6/24/2019 3.09 % Semi-annual 5 7,675 9,033

Equipment Note 8

12/27/2019 2.75 % Semi-annual 5 6,008 6,496

Equipment Note 9

12/24/2019 3.01 % Semi-annual 7 4,285 4,534

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

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

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

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

29,420 29,420

4 unchanged sentences

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”), not to exceed three times Consolidated EBITDA (as defined in the Credit Agreement) less Consolidated Total Indebtedness (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.

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

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

11 unchanged sentences

The Credit Agreement restricts certain types of payments when the Company’s consolidated Leverage Ratio exceeds 2.50 or the Company's consolidated Liquidity (as defined in the Credit Agreement) is less than $ 50 million.

The weighted average interest rate on borrowings outstanding on the Facility for the nine months ended September 30, 2020 was 2.36 % 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.

The Company was in compliance with all of its financial covenants under the Credit Agreement as of September 30, 2020.

As of September 30, 2020, the Company had letters of credit outstanding under the Facility of approximately $ 11.3 million, including $ 10.7 million related to the Company's payment obligation under its insurance programs and approximately $ 0.6 million related to contract performance obligations.

As of December 31, 2019, the Company had letters of credit outstanding under the Facility of approximately $ 10.6 million, including $ 10.0 million related to the Company's payment obligation under its insurance programs and approximately $ 0.6 million related to contract performance obligations.

The Company had remaining deferred debt issuance costs totaling $ 1.2 million as of September 30, 2020, related to the line of credit.

As permitted under ASU No.

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.

The Company was in compliance with all of its financial covenants under the Credit Agreement as of March 31, 2021.

As of March 31, 2021, the Company had no debt outstanding under the Facility and letters of credit outstanding under the Facility of approximately $ 12.3 million, all of which was related to the Company's payment obligation under its insurance programs.

As of December 31, 2020, the Company had no debt outstanding under the Facility and letters of credit outstanding under the Facility of approximately $ 10.4 million, including $ 9.8 million related to the Company's payment obligation under its insurance programs and approximately $ 0.6 million related to contract performance obligations.

The Company had remaining deferred debt issuance costs totaling $ 1.1 million as of March 31, 2021, related to the line of credit.

As permitted, debt issuance costs have been deferred and are presented as an asset within other assets, which is amortized as interest expense over the term of the line of credit.

Equipment Notes

2 unchanged sentences

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

As of September 30, 2020, the Company had four Equipment Notes outstanding under the Master Loan Agreements that are collateralized by equipment and vehicles owned by the Company.

The following table sets forth our remaining principal payments for the Company’s outstanding Equipment Notes as of September 30, 2020:

As of March 31, 2021, the Company had four Equipment Notes outstanding under the Master Loan Agreements that are collateralized by equipment and vehicles owned by the Company.

The following table sets forth our remaining principal payments for the Company’s outstanding Equipment Notes as of March 31, 2021:

(in thousands) Future

2 unchanged sentences

Remainder of 2021

Thereafter 6,592

Total future principal payments $ 29,420

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A majority of the Company’s revenues are earned through contracts with customers that normally provide for payment upon completion of specified work or units of work as identified in the contract.

Although there is considerable variation in the terms of these contracts, they are primarily structured as fixed-price contracts, under which the Company agrees to do the entire project for a fixed amount, or unit-price contracts, under which the Company agrees to do the work at a fixed price per unit of work as specified in the contract.

Although there is considerable variation in the terms of these contracts, they are primarily structured as fixed-price contracts, under which the Company agrees to perform a defined scope of a project for a fixed amount, or unit-price contracts, under which the Company agrees to do the work at a fixed price per unit of work as specified in the contract.

The Company also enters into time-and-equipment and time-and-materials contracts under which the Company is paid for labor and equipment at negotiated hourly billing rates and for other expenses, including materials, as incurred at rates agreed to in the contract.

Finally, the Company sometimes enters into cost-plus contracts, where the Company is paid for costs plus a negotiated margin.

On occasion, time-and-equipment, time-and-materials and cost-plus contracts include a guaranteed not-to-exceed maximum price.

On occasion, time-and-equipment, time-and-materials and cost-plus contracts require the Company to include a guaranteed not-to-exceed maximum price.

Historically, fixed-price and unit-price contracts have had the highest potential margins;

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Additional information related to the Company’s market types is provided in Note 10–Segment Information.

The components of the Company’s revenue by contract type for the three and nine months ended September 30, 2020 and 2019 were as follows:

Three months ended September 30, 2020

T&D C&I Total

(dollars in thousands) Amount Percent Amount Percent Amount Percent

Fixed price $ 126,387 42.2 % $ 248,596 80.7 % $ 374,983 61.7 %

Unit price 88,579 29.6 22,589 7.3 111,168 18.3

T&E 79,714 26.6 24,322 7.9 104,036 17.1

Other 5,059 1.6 12,655 4.1 17,714 2.9

$ 299,739 100.0 % $ 308,162 100.0 % $ 607,901 100.0 %

Three months ended September 30, 2019

T&D C&I Total

(dollars in thousands) Amount Percent Amount Percent Amount Percent

Fixed price $ 157,357 53.4 % $ 220,872 76.6 % $ 378,229 64.9 %

Unit price 49,392 16.7 19,518 6.8 68,910 11.8

T&E 84,299 28.6 32,868 11.4 117,167 20.1

Other 3,892 1.3 15,016 5.2 18,908 3.2

$ 294,940 100.0 % $ 288,274 100.0 % $ 583,214 100.0 %

The components of the Company’s revenue by contract type for the nine months ended September 30, 2020 and 2019 were as follows:

Nine months ended September 30, 2020

The components of the Company’s revenue by contract type for the three months ended March 31, 2021 and 2020 were as follows:

Three months ended March 31, 2021

T&D C&I Total

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$ 314,908 100.0 % $ 277,578 100.0 % $ 592,486 100.0 %

Nine months ended September 30, 2019

Three months ended March 31, 2020

T&D C&I Total

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$ 259,270 100.0 % $ 259,200 100.0 % $ 518,470 100.0 %

The components of the Company’s revenue by market type for the three months ended September 30, 2020 and 2019 were as follows:

Three months ended September 30, 2020 Three months ended September 30, 2019

(dollars in thousands) Amount Percent Segment Amount Percent Segment

$ 185,007 30.4 % T&D $ 196,083 33.6 % T&D

114,732 18.9 T&D 98,857 17.0 T&D

Electrical construction

308,162 50.7 C&I 288,274 49.4 C&I

Total revenue $ 607,901 100.0 % $ 583,214 100.0 %

The components of the Company’s revenue by market type for the nine months ended September 30, 2020 and 2019 were as follows:

Nine months ended September 30, 2020 Nine months ended September 30, 2019

The components of the Company’s revenue by market type for the three months ended March 31, 2021 and 2020 were as follows:

Three months ended March 31, 2021 Three months ended March 31, 2020

(dollars in thousands) Amount Percent Segment Amount Percent Segment

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Remaining Performance Obligations

As of September 30, 2020, the Company had $ 1.60 billion of remaining performance obligations.

As of March 31, 2021, the Company had $ 1.53 billion of remaining performance obligations.

The Company’s remaining performance obligations include projects that have a written award, a letter of intent, a notice to proceed or an agreed upon work order to perform work on mutually accepted terms and conditions.

The following table summarizes the amount of remaining performance obligations as of September 30, 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 at September 30, 2020

The following table summarizes the amount of remaining performance obligations as of March 31, 2021 that the Company expects to be realized and the amount of the remaining performance obligations that the Company reasonably estimates will not be recognized within the next twelve months.

Remaining Performance Obligations at March 31, 2021

(in thousands) Total Amount estimated to not be

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“Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

federal statutory tax rate was 21 % for each of the three and nine months ended September 30, 2020 and 2019.

The Company’s effective tax rate for the three and nine months ended September 30, 2020 was 27.4 % and 27.7 %, respectively, of pretax income compared to the effective tax rate for the three and nine months ended September 30, 2019 of 26.4 % and 27.2 %, respectively.

federal statutory tax rate was 21 % for each of the three months ended March 31, 2021 and 2020.

The Company’s effective tax rate for the three months ended March 31, 2021 was 26.2 % of pretax income compared to the effective tax rate for the three months ended March 31, 2020 of 29.1 %.

The difference between the U.S.

federal statutory tax rate and the Company’s effective tax rate for the three and nine months ended September 30, 2020 was primarily due to state income taxes and foreign earnings and the associated impact of the global intangible low tax income (“GILTI”) and other permanent difference items.

federal statutory tax rate and the Company’s effective tax rate for the three months ended March 31, 2021 was primarily due to state income taxes and foreign earnings and the associated impact of the global intangible low tax income (“GILTI”) and other permanent difference items, partially offset by a favorable impact from stock compensation excess tax benefits.

The difference between the U.S.

federal statutory tax rate and the Company’s effective tax rate for the three and nine months ended September 30, 2019, was primarily due to state income taxes offset by the impact of the Company’s noncontrolling interest.

The Company had unrecognized tax benefits of approximately $ 0.4 million and $ 0.2 million as of September 30, 2020 and December 31, 2019, which were included in other liabilities in the accompanying consolidated balance sheets.

federal statutory tax rate and the Company’s effective tax rate for the three months ended March 31, 2020, was primarily due to state income taxes and excess tax expense pertaining to the vesting of stock awards related to the Company’s stock compensation program along with foreign earnings and the associated impact of GILTI.

The Company had unrecognized tax benefits of approximately $ 0.4 million as of March 31, 2021 and December 31, 2020, respectively, which were included in other liabilities in the accompanying consolidated balance sheets.

The Company’s policy is to recognize interest and penalties related to income tax liabilities as a component of income tax expense in the consolidated statements of operations.

The amount of interest and penalties charged to income tax expense related to unrecognized tax benefits was no t significant for the three and nine months ended September 30, 2020 and 2019.

The amount of interest and penalties charged to income tax expense related to unrecognized tax benefits was no t significant for the three months ended March 31, 2021 and 2020.

The Company is subject to taxation in various jurisdictions.

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Purchase Commitments

As of September 30, 2020, the Company had approximately $ 3.0 million in outstanding purchase orders for certain construction equipment, with cash payments scheduled to occur over the next three months .

As of March 31, 2021, the Company had approximately $ 18.0 million in outstanding purchase orders for certain construction equipment, with cash payments scheduled to occur over the next nine months .

Insurance and Claims Accruals

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The insurance and claims accruals are based on known facts, actuarial estimates and historical trends.

While recorded accruals are based on the ultimate liability, which includes amounts in excess of the deductible, a corresponding receivable for amounts in excess of the deductible is included in current and long-term assets in the consolidated balance sheets.

Performance and Payment Bonds and Parent Guarantees

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

As of September 30, 2020, an aggregate of approximately $ 1.36 billion in original face amount of bonds issued by the Company’s sureties were outstanding.

The Company estimated the remaining cost to complete these bonded projects was approximately $ 660.2 million as of September 30, 2020.

As of March 31, 2021, an aggregate of approximately $ 1.20 billion in original face amount of bonds issued by the Company’s sureties were outstanding.

The Company estimated the remaining cost to complete these bonded projects was approximately $ 632.8 million as of March 31, 2021.

From time to time, the Company guarantees the obligations of wholly owned subsidiaries, including obligations under certain contracts with customers, certain lease agreements, and, in some states, obligations in connection with obtaining contractors’ licenses.

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Collective Bargaining Agreements

Many of the Company’s subsidiaries’ craft labor employees are covered by collective bargaining agreements.

Most of the Company’s subsidiaries’ craft labor employees are covered by collective bargaining agreements.

The agreements require the subsidiaries to pay specified wages, provide certain benefits and contribute certain amounts to multi-employer pension plans.

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The Company maintains two equity compensation plans under which stock-based compensation has been granted:

the 2017 Long-Term Incentive Plan (which was amended and restated as of April 23, 2020) (the “LTIP”) and the 2007 Long-Term Incentive Plan (the “2007 Plan”).

the 2017 Long-Term Incentive Plan (which was amended and restated as of April 23, 2020) (the “LTIP”) and the 2007 Long-Term Incentive Plan (as amended) (the “2007 Plan”).

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

1 unchanged sentence

federal income tax laws, (b) stock options that do not qualify as incentive stock options, (c) stock appreciation rights, (d) restricted stock awards, (e) restricted stock units, (f) performance share awards, (g) phantom stock units, (h) stock bonuses, (i) dividend equivalents, and (j) any combination of such grants.

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 .

The Company has outstanding grants of time-vested stock awards in the form of restricted stock awards and restricted stock units.

During the nine months ended September 30, 2020, the Company granted 104,857 shares of time-vested stock awards under the LTIP to employees and to our non-employee directors at a weighted average grant date fair value of $ 26.75 .

These time-vested stock awards granted to non-employee directors vest over one year , time-vested stock awards granted to employees vest ratably on April 27, 2021, March 23, 2022 and March 23, 2023.

During the nine months ended September 30, 2020, 77,397 shares of time-vested stock awards vested at a weighted average grant date fair value of $ 34.31 .

During the nine months ended September 30, 2020, the Company granted 79,788 performance share awards under the LTIP at target, which cliff vest on December 31, 2022, at a weighted average grant date fair value of $ 34.10 .

The Company has outstanding grants of time-vested stock awards in the form of restricted stock units.

During the three months ended March 31, 2021, the Company granted time-vested stock awards covering 47,956 shares of common stock under the LTIP, which vest ratably over three years , at a weighted average grant date fair value of $ 66.38 .

During the three months ended March 31, 2021, time-vested stock awards covering 40,662 shares of common stock vested at a weighted average grant date fair value of $ 32.02 .

During the three months ended March 31, 2021, the Company granted 42,091 performance share awards under the LTIP at target, which will cliff vest, if earned, on December 31, 2023, at a weighted average grant date fair value of $ 80.11 .

The number of shares ultimately earned under a performance award may vary from zero to 200 % of the target shares granted, based upon the Company’s performance compared to certain metrics.

The metrics used were determined at the time of the grant by the Compensation Committee of the Board of Directors and were either based on internal measures, such as the Company’s financial performance compared to targets, or on a market-based metric, such as the Company’s stock performance compared to a peer group.

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

During the nine months ended September 30, 2020, plan participants exercised options to purchase 14,980 shares of the Company’s common stock with a weighted average exercise price of $ 20.42 .

Performance awards granted cliff vest following the performance period if the stated performance targets and minimum service requirements are attained and are paid in shares of the Company’s common stock.

During the three months ended March 31, 2021, plan participants exercised options to purchase 5,102 shares of the Company’s common stock with a weighted average exercise price of $ 21.71 .

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.

23 unchanged sentences

Three months ended

September 30, Nine months ended

September 30,

(in thousands) 2021 2020

8 unchanged sentences

$ 27,411 $ 16,408

For the three and nine months ended September 30, 2020, contract revenues attributable to the Company’s Canadian operations were $ 19.6 million and $ 58.6 million, respectively, predominantly in the C&I segment.

For the three and nine months ended September 30, 2019, contract revenues attributable to the Company’s Canadian operations were $ 22.3 million and $ 55.8 million, respectively, predominantly in the C&I segment.

Noncontrolling Interest

On July 2, 2018, through the acquisition of certain assets of the Huen Electric, Inc., Huen Electric New Jersey Inc., and Huen New York, Inc.

(collectively, the “Huen Companies”), the Company became the majority controlling interest in a joint venture.

As a result, the Company has consolidated the carrying value of the joint ventures’ assets and liabilities and results of operations in the Company’s consolidated financial statements.

The acquired joint venture made no distributions to its partners, and the Company made no capital contributions to the joint venture, during the three and nine months ended September 30, 2020.

Additionally, there have been no changes in ownership during the three and nine months ended September 30, 2020.

The project associated with this joint venture was substantially completed in 2019.

For the three months ended March 31, 2021 and 2020, contract revenues attributable to the Company’s Canadian operations were $ 17.7 million and $ 18.1 million, respectively, predominantly in the C&I segment.

Earnings Per Share

The Company computes earnings per share attributable to MYR Group Inc.

using the treasury stock method.

Under the treasury stock method, basic earnings per share attributable to MYR Group Inc.

are computed by dividing net income available to stockholders by the weighted average number of common shares outstanding during the period, and diluted earnings per share are computed by dividing net income available to stockholders by the weighted average number of common shares outstanding during the period plus all potentially dilutive common stock equivalents, except in cases where the effect of the common stock equivalent would be anti-dilutive.

Net income attributable to MYR Group Inc.

and the weighted average number of common shares used to compute basic and diluted earnings per share were as follows:

The Company computes earnings per share using the treasury stock method.

Under the treasury stock method, basic earnings per share are computed by dividing net income available to stockholders by the weighted average number of common shares outstanding during the period, and diluted earnings per share are computed by dividing net income available to stockholders by the weighted average number of common shares outstanding during the period plus all potentially dilutive common stock equivalents, except in cases where the effect of the common stock equivalent would be anti-dilutive.

Net income and the weighted average number of common shares used to compute basic and diluted earnings per share were as follows:

Three months ended

September 30, Nine months ended

September 30,

(in thousands, except per share data) 2021 2020

Net income attributable to MYR Group Inc.

$ 17,292 $ 10,355 $ 40,609 $ 24,915

Net income $ 19,928 $ 9,932

Weighted average common shares outstanding 16,760 16,627

1 unchanged sentence

Weighted average common shares outstanding, diluted 17,045 16,742

Income per common share attributable to MYR Group Inc.:

Income per common share:

Basic $ 1.19 $ 0.60

Diluted $ 1.17 $ 0.59

For the three and nine months ended September 30, 2020 and 2019, 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.

For the three months ended March 31, 2021 and 2020, 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.

All of the Company’s unvested time-vested stock awards were included in the computation of weighted average dilutive securities.

The following table summarizes the shares of common stock underlying the Company’s unvested performance awards that were excluded from the calculation of dilutive securities:

The following table summarizes the shares of common stock underlying the Company’s unvested time-vested stock awards and performance awards that were excluded from the calculation of dilutive securities:

Three months ended

September 30, Nine months ended

September 30,

(in thousands) 2021 2020

Time-vested stock awards 48 —

Performance awards 42 30

Subsequent Event

On April 13, 2021, the Company prepaid its $ 7.0 million Equipment Note 7 using cash on hand.

This prepayment included an insignificant amount of accrued interest and there was no associated prepayment penalty.

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-Q

Item 1. Financial Statements