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Item 5. Market for Registrant’s Common Equity

2022-02-23 compared with 2021-03-03 · 4 added, 140 removed, 42 unchanged (77% of the section changed)

6 unchanged sentences

Any future determination to declare cash dividends will be made at the discretion of our board of directors, subject to compliance with legal requirements and covenants under any existing financing agreements, which may restrict or limit our ability to declare or pay dividends, and will depend on our financial condition, results of operations, capital requirements, general business conditions, and other factors that our board of directors may deem relevant.

Issuances of Common Stock

On October 22, 2020, a total of 270 unregistered shares of our common stock, valued in the aggregate at $11,966 was issued to a director of the Company who elected to receive a portion of their director retainer fee in stock in lieu of cash.

The shares were issued pursuant to the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933 for an issuance not involving a public offering.

Purchases of Common Stock

The following table includes all of the Company’s repurchases of common stock for the periods shown.

Repurchased shares are retired and returned to authorized but unissued common stock.

Period Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (2)

October 1, 2020 - October 31, 2020 2,597 $ 43.94 — $ 50,000,000

November 1, 2020 - November 30, 2020 2,172 $ 51.92 — $ 50,000,000

December 1, 2020 - December 31, 2020 — $ — — $ 50,000,000

Total 4,769 $ 47.57 —

(1) This column contains repurchases of common stock to satisfy tax obligations on the vesting of restricted stock under the 2007 Long-Term Incentive Plan (as amended).

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

We did not purchase any shares of common stock in October, November or December of 2021.

Performance Graph

The following Performance Graph and related information shall be deemed “furnished” and not “filed” for purposes of Section 18 of the Exchange Act, and such information shall not be incorporated by reference into any future filing under the Securities Act or the Exchange Act except to the extent that we specifically incorporate it by reference into such filing .

The following graph compares, for the period from December 31, 2015 to December 31, 2020, the cumulative total stockholder return on our common stock with the cumulative total return on the Standard & Poor’s 500 Index (the “S&P 500 Index”), the Russell 2000 Index, and a peer group index selected by our management that includes twelve publicly traded companies within our industry (the “Peer Group”).

The following graph compares, for the period from December 31, 2016 to December 31, 2021, the cumulative total stockholder return on our common stock with the cumulative total return on the Standard & Poor’s 500 Index (the “S&P 500 Index”), the Russell 2000 Index, and a peer group index selected by our management that includes eleven publicly traded companies within our industry (the “Peer Group”).

The comparison assumes that $100 was invested on December 31, 2016 and further assumes any dividends were reinvested quarterly.

2 unchanged sentences

When taken as a whole, the Peer Group more closely resembles our total business than any individual company in the group while reducing the impact of a significant change in any one of the Peer Group company’s stock price.

For 2021, we removed Aegion Corporation from our Peer Group because they are no longer publicly traded.

The Peer Group is composed of the following companies:

Aegion Corporation

Matrix Service Company

Astec Industries, Inc.

7 unchanged sentences

Tetra Tech, Inc.

Matrix Service Company

___________________________

16 unchanged sentences

Peer Group 100.00 116.63 88.70 118.27 154.33 221.98

Selected Financial Data

The following table sets forth certain summary financial information on a historical basis.

The summary statement of operations and the balance sheet data set forth below have been derived from our audited Financial Statements and footnotes thereto included elsewhere in this filing or in prior filings.

Our Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

Historical results are not necessarily indicative of the results we expect in the future and quarterly results are not necessarily indicative of the results of any future quarter or any full-year period.

The information below should be read in conjunction with “Item 7.

Management’s Discussion and Analysis of Financial Condition and Results from Operations” and the Financial Statements and notes thereto included in this Annual Report on Form 10-K.

Statement of operations data:

For the year ended December 31,

(in thousands, except per share data) 2020 2019 2018 2017 2016

Contract revenues (1)

$ 2,247,392 $ 2,071,159 $ 1,531,169 $ 1,403,317 $ 1,142,487

Contract costs 1,971,539 1,857,001 1,364,109 1,278,313 1,007,764

Gross profit 275,853 214,158 167,060 125,004 134,723

Selling, general and administrative expenses 188,535 156,674 118,737 98,611 96,424

Amortization of intangible assets 3,586 3,849 1,843 499 886

Gain on sale of property and equipment (2,813) (3,543) (3,832) (3,664) (1,341)

Income from operations 86,545 57,178 50,312 29,558 38,754

Other income (expense):

Interest income 9 4 24 4 5

Interest expense (4,563) (6,225) (3,652) (2,603) (1,299)

Other income (expense), net (606) (515) (3,616) (2,319) 885

Income before provision for income taxes 81,385 50,442 43,068 24,640 38,345

Income tax expense (2)

22,626 14,228 11,774 3,486 16,914

Net income 58,759 36,214 31,294 21,154 21,431

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

Net income attributable to MYR Group Inc.

$ 58,759 $ 37,690 $ 31,087 $ 21,154 $ 21,431

Income per common share attributable to MYR Group Inc.:

– Basic $ 3.52 $ 2.27 $ 1.89 $ 1.30 $ 1.25

– Diluted $ 3.48 $ 2.26 $ 1.87 $ 1.28 $ 1.23

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

– Basic 16,684 16,587 16,441 16,273 17,109

– Diluted 16,890 16,699 16,585 16,496 17,461

Balance sheet data:

As of December 31,

(in thousands) 2020 2019 2018 2017 2016

Cash and cash equivalents $ 22,668 $ 12,397 $ 7,507 $ 5,343 $ 23,846

Working capital (3)

193,284 242,370 191,829 191,172 146,677

Total assets 995,859 1,007,871 748,755 603,788 573,495

Total debt 29,420 165,824 89,792 78,960 59,070

Total liabilities 566,567 643,396 424,291 316,749 310,321

Total stockholders’ equity attributable to MYR Group Inc.

429,288 364,471 322,984 287,039 263,174

For the year ended December 31,

(in thousands) 2020 2019 2018 2017 2016

Net cash flows provided by (used in) operating activities $ 175,167 $ 64,899 $ 84,789 $ (9,198) $ 54,490

Net cash flows used in investing activities (40,926) (133,497) (93,203) (26,501) (34,128)

Net cash flows provided by (used in) financing activities (124,296) 73,356 10,642 16,889 (35,539)

Depreciation and amortization (4)

46,453 44,516 39,913 38,576 39,122

Capital expenditures 44,355 57,828 50,704 30,843 25,371

1,649,456 1,499,203 1,146,637 679,139 688,832

132,392 101,179 86,609 65,815 78,761

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(1) On January 1, 2018, we adopted 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.

(2) The Tax Cuts and Jobs Act of 2017 (“2017 Tax Act”), among its many provisions, reduced the federal statutory tax rate from 35% to 21%.

The Company applied the new provisions to its tax assets and liabilities in 2017, which resulted in a net reduction of income tax expense.

Income tax expense in the years after 2017 benefited from the lower federal statutory tax rate and other provisions of the 2017 Tax Act.

See further discussion in Note 12 — Income Taxes to our Financial Statements.

(3) Working capital is a non-GAAP measure.

The Company defines working capital as total current assets less total current liabilities.

The following table provides the Company’s calculation of working capital:

As of December 31,

(in thousands) 2020 2019 2018 2017 2016

Total current assets $ 636,684 $ 639,184 $ 475,634 $ 379,736 $ 342,899

total current liabilities (443,400) (396,814) (283,805) (188,564) (196,222)

Working capital $ 193,284 $ 242,370 $ 191,829 $ 191,172 $ 146,677

(4) Depreciation and amortization includes depreciation on capital assets, amortization of finance lease assets and amortization of finite-lived intangible assets.

(5) Backlog represents our estimated revenue on uncompleted contracts, including the amount of revenue on contracts on which work has not begun, minus the revenue we have recognized under such contracts.

Business — Backlog” for a discussion on how we calculate backlog for our business and “Item 1A.

Risk Factors — Backlog may not be realized or may not result in profits and may not accurately represent future revenue.”

(6) EBITDA is a non-GAAP measure used by management that we define as net income attributable to MYR Group Inc.

plus net income from noncontrolling interests, interest expense net of interest income, income tax expense and depreciation and amortization, as shown in the following table.

EBITDA does not purport to be an alternative to net income attributable to MYR Group Inc.

as a measure of operating performance or to net cash flows provided by operating activities as a measure of liquidity.

We believe that EBITDA is useful to investors and other external users of our Consolidated Financial Statements in evaluating our operating performance and cash flow because EBITDA is widely used by investors to measure a company’s operating performance without regard to items such as interest expense, taxes, depreciation and amortization, which can vary substantially from company to company depending upon accounting methods, book value of assets, useful lives placed on assets, capital structure and the method by which assets were acquired.

Because not all companies define EBITDA as we do, this presentation of EBITDA may not be comparable to other similarly-titled measures of other companies.

We use, and we believe investors benefit from, the presentation of EBITDA in evaluating our operating performance because it provides us and our investors with an additional tool to compare our operating performance on a consistent basis by removing the impact of certain items that management believes do not directly reflect our core operations.

Using EBITDA as a performance measure has material limitations as compared to net income, or other financial measures as defined under GAAP, as it excludes certain recurring items, which may be meaningful to investors.

EBITDA excludes interest expense net of interest income;

however, as we have borrowed money to finance transactions and operations, or invested available cash to generate interest income, interest expense and interest income are elements of our cost structure and can affect our ability to generate revenue and returns for our stockholders.

Further, EBITDA excludes depreciation and amortization;

however, as we use capital and intangible assets to generate revenues, depreciation and amortization are a necessary element of our costs and ability to generate revenue.

Finally, EBITDA excludes income taxes;

however, as we are organized as a corporation, the payment of taxes is a necessary element of our operations.

As a result of these exclusions from EBITDA, any measure that excludes interest expense net of interest income, depreciation and amortization and income taxes has material limitations as compared to net income.

When using EBITDA as a performance measure, management compensates for these limitations by comparing EBITDA to net income in each period, to allow for the comparison of the performance of the underlying core operations with the overall performance of the company on a full-cost, after-tax basis.

Using both EBITDA and net income to evaluate the business allows management and investors to (a) assess our relative performance against our competitors and (b) monitor our capacity to generate returns for our stockholders.

The following table provides a reconciliation of net income attributable to MYR Group Inc.

For the year ended December 31,

(in thousands) 2020 2019 2018 2017 2016

Net income attributable to MYR Group Inc.

$ 58,759 $ 37,690 $ 31,087 $ 21,154 $ 21,431

Net income (loss) - noncontrolling interests — (1,476) 207 — —

Net income 58,759 36,214 31,294 21,154 21,431

Interest expense, net 4,554 6,221 3,628 2,599 1,294

Income tax expense 22,626 14,228 11,774 3,486 16,914

Depreciation and amortization 46,453 44,516 39,913 38,576 39,122

EBITDA $ 132,392 $ 101,179 $ 86,609 $ 65,815 $ 78,761

We also use EBITDA as a liquidity measure.

Certain material covenants contained within our credit agreement (the “Credit Agreement”) are based on EBITDA with certain additional adjustments as defined in the Credit Agreement.

Non-compliance with these financial covenants under the Credit Agreement — our interest coverage ratio 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) and our 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) — could result in our lenders requiring us to immediately repay all amounts borrowed.

If we anticipated a potential covenant violation, we would seek relief from our lenders, likely causing us to incur additional cost, and such relief might not be available, or if available, might not be on terms as favorable as those in the Credit Agreement.

In addition, if we cannot satisfy these financial covenants, we would be prohibited under the Credit Agreement from engaging in certain activities, such as incurring additional indebtedness, making certain payments, and acquiring or disposing of assets.

Based on the information above, management believes that the presentation of EBITDA as a liquidity measure is useful to investors and relevant to their assessment of our capacity to service or incur debt, fund capital expenditures, finance acquisitions and expand our operations.

The following table provides a reconciliation of net cash flows provided by operating activities to EBITDA:

For the year ended December 31,

(in thousands) 2020 2019 2018 2017 2016

Net cash flows provided by (used in) operating activities $ 175,167 $ 64,899 $ 84,789 $ (9,198) $ 54,490

Add/(subtract)

Changes in operating assets and liabilities (67,770) 21,322 (10,363) 65,743 13,795

Adjustments to reconcile net income to net cash flows provided by (used in) operating activities (48,638) (50,007) (43,132) (35,391) (46,854)

Depreciation and amortization 46,453 44,516 39,913 38,576 39,122

Income tax expense 22,626 14,228 11,774 3,486 16,914

Interest expense, net 4,554 6,221 3,628 2,599 1,294

EBITDA $ 132,392 $ 101,179 $ 86,609 $ 65,815 $ 78,761

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 5. Market for Registrant’s Common Equity