What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-02-23 compared with 2021-03-03 · 106 added, 209 removed, 1052 unchanged (23% of the section changed)

2 unchanged sentences

Management’s Report on Internal Control Over Financial Reporting

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Fir m (1)

Consolidated Balance Sheets as of December 31, 2021 and 2020

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Notes to Financial Statements

___________________________

(1) The report of MYR Group’s independent registered public accounting firm (PCAOB ID:

173 ) with respect to the above-referenced financial statements and their report on internal control over financial reporting are included in Item 8 of this Form 10-K at the page number referenced above.

Management’s Report on Internal Control Over Financial Reporting

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Crowe LLP, the independent registered public accounting firm that audited and reported on the 2021 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, 2021 and has issued an attestation report on MYR Group’s internal control over financial reporting which appears herein.

March 3, 2021

February 23, 2022

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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Oak Brook, Illinois

March 3, 2021

February 23, 2022

MYR GROUP INC.

9 unchanged sentences

Refundable income taxes 9,228 1,534

Other current assets 28,882 12,811

Prepaid expenses and other current assets 45,564 28,882

Total current assets 748,390 636,684

17 unchanged sentences

Current portion of accrued self-insurance 24,242 24,395

Accrued income taxes 2,021 —

Other current liabilities 94,857 86,718

4 unchanged sentences

Operating lease obligations, net of current maturities 13,230 15,730

Finance lease obligations, net of current maturities — 338

Other liabilities 11,261 18,631

9 unchanged sentences

Additional paid-in capital 163,754 158,618

Accumulated other comprehensive income (loss) 23 ( 446 )

Accumulated other comprehensive income 173 23

Retained earnings 355,007 270,480

23 unchanged sentences

Net income 85,006 58,759 36,214

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

net loss attributable to noncontrolling interest ( 4 ) — ( 1,476 )

Net income attributable to MYR Group Inc.

11 unchanged sentences

Total comprehensive income 85,156 59,228 35,961

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

net loss attributable to noncontrolling interest ( 4 ) — ( 1,476 )

Total comprehensive income attributable to MYR Group Inc.

11 unchanged sentences

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

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

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

1 unchanged sentence

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

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

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

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

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

1 unchanged sentence

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

1 unchanged sentence

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

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

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

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

1 unchanged sentence

Net income — — — — — 85,010 85,010 ( 4 ) 85,006

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

Stock issued under compensation plans, net — 187 2 496 — — 498 — 498

18 unchanged sentences

Other non-cash items 1,892 1,951 1,029

Changes in operating assets and liabilities, net of acquisitions:

Changes in operating assets and liabilities:

Accounts receivable, net 10,659 2,903 ( 39,710 )

Contract assets 31,360 ( 16,443 ) ( 28,141 )

Contract assets, net ( 39,266 ) 31,360 ( 16,443 )

Receivable for insurance claims in excess of deductibles ( 4,619 ) ( 1,511 ) ( 9,646 )

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

Prepaid expenses and other assets ( 25,320 ) ( 15,458 ) ( 10,327 )

Accounts payable 34,348 ( 43,079 ) 22,492

15 unchanged sentences

Debt refinancing costs — — ( 1,122 )

Repurchase of common shares ( 652 ) ( 778 ) ( 1,043 )

Payments related to tax withholding for stock-based compensation ( 3,352 ) ( 652 ) ( 778 )

Other financing activities 12 13,249 84

17 unchanged sentences

MYR Group Inc.

(the “Company”) is a holding company of specialty electrical construction service providers and is currently conducting operations through wholly owned subsidiaries including:

Myers Co., a Delaware corporation;

Harlan Electric Company, a Michigan corporation;

Great Southwestern Construction, Inc., a Colorado corporation;

Sturgeon Electric Company, Inc., a Michigan corporation;

MYR Energy Services, Inc., a Delaware corporation;

Boulos Company, a Delaware corporation;

High Country Line Construction, Inc., a Nevada corporation;

Sturgeon Electric California, LLC, a Delaware limited liability company;

GSW Integrated Services, LLC, a Delaware limited liability company;

Huen Electric, Inc., a Delaware corporation;

CSI Electrical Contractors, Inc., a Delaware corporation;

MYR Transmission Services Canada, Ltd., a British Columbia corporation;

Northern Transmission Services, Ltd., a British Columbia corporation and Western Pacific Enterprises Ltd., a British Columbia corporation.

(the “Company”) is a holding company of specialty electrical construction service providers and is currently conducting operations through wholly owned subsidiaries.

The Company performs construction services in two business segments:

4 unchanged sentences

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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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.

During the years ended December 31, 2021, 2020 and 2019, the Company recognized its proportionate share of joint venture revenues of $ 26.1 million, $ 27.2 million, and $ 20.3 million, respectively.

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

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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.

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

Foreign currency losses, recorded in other income, net, for the year ended December 31, 2021, were $ 0.1 million.

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.

2 unchanged sentences

Actual results could differ from those estimates.

The most significant estimates are related to estimates of costs to complete on contracts, pending change orders and claims, shared savings, insurance reserves, income tax reserves, estimates surrounding stock-based compensation, the recoverability of goodwill and intangibles and accounts receivable reserves.

Actual results could differ from these estimates.

The Company estimates a cost accrual every period 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 December 31, 2021 and 2020, the Company recognized revenues of $ 2.4 million and $ 14.7 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.

2 unchanged sentences

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 year ended December 31, 2020, changes in estimates pertaining to certain projects decreased consolidated gross margin by 0.8 %, which resulted in decreases in operating income of $ 18.0 million, net income attributable to MYR Group Inc.

of $ 12.8 million and diluted earnings per common share attributable to MYR Group Inc.

During the year ended December 31, 2021, changes in estimates pertaining to certain projects increased consolidated gross margin by 0.4 %, which resulted in increases in operating income of $ 9.2 million, net income of $ 6.6 million and diluted earnings per common share attributable to MYR Group Inc.

The estimates are reviewed and revised quarterly, as needed.

During the year ended December 31, 2019, changes in estimates pertaining to certain projects decreased consolidated gross margin by 0.8 %, which resulted in decreases in operating income of $ 11.7 million, net income attributable to MYR Group Inc.

of $ 7.5 million and diluted earnings per common share attributable to MYR Group Inc.

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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 $ 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.

1 unchanged sentence

Property and Equipment

Property and equipment is carried at cost.

Property and equipment is carried at cost, except for assets acquired in a business combination which are recorded at fair value at the date of acquisition.

Depreciation is computed using the straight-line method over estimated useful lives.

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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.

The Company also maintains excess umbrella coverage providing higher layers of insurance coverage for losses that exhaust the limits of underlying coverage.

A layer of this umbrella coverage requires the Company to pay a portion of any loss within a certain loss range and our potential exposure for such losses is up to approximately $ 3.8 million.

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

33 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 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.

In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes , which simplifies the accounting for income taxes, eliminates certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects of the current guidance to promote consistent application among reporting entities.

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

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

In October 2021, the FASB issued ASU No.

2021-08, Business Combinations (Topic 805) Accounting for Contract Assets and Contract Liabilities from Contracts with Customers , which is intended to improve the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice and inconsistency related to the recognition of an acquired contract liability and payment terms and their effect on subsequent revenue recognized by the acquirer.

Under the new guidance the acquirer is required to recognize contract assets and contract liabilities acquired in a business combination in accordance with Topic 606 as if the acquirer had originated the contracts.

The update is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

Early adoption is permitted, including in an interim period, for any period for which financial statements have not yet been issued.

However, adoption in an interim period other than the first fiscal quarter requires an entity to apply the new guidance to all prior business combinations that have occurred since the beginning of the annual period in which the new guidance is adopted.

The Company is currently evaluating the adoption date and impact, if any, this update will have on its financial position and results of operations.

CSI Electrical Contractors, Inc.

7 unchanged sentences

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 and $ 2.0 million were recorded in other expense for the year ended December 31, 2020 and 2019, respectively.

Changes in contingent consideration, subsequent to the acquisition, related to the margin guarantee adjustments on contracts of approximately $ 0.5 million, $ 0.6 million and $ 2.0 million were recorded in other expense for the year ended December 31, 2021, 2020 and 2019, respectively.

Future margin guarantee adjustments, if any, are expected to be recognized in 2022.

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.

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 Measurement

Adjustments Final Acquisition

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

Net asset adjustments 633 354 987

Total consideration, net of net asset adjustments $ 80,353 $ 354 $ 80,707

Accounts receivable, net $ 59,579 $ 186 $ 59,765

Contract assets 38,970 994 39,964

Other current assets 83 — 83

Property and equipment 7,964 — 7,964

Operating lease right-of-use assets 9,933 — 9,933

Intangible assets 26,000 ( 500 ) 25,500

Other long term assets 149 — 149

Accounts payable ( 29,533 ) ( 1,100 ) ( 30,633 )

Accrued salaries and benefits ( 8,091 ) — ( 8,091 )

Contract liabilities ( 18,934 ) 200 ( 18,734 )

Current portion of operating lease obligations ( 2,526 ) ( 36 ) ( 2,562 )

Other current liabilities ( 4,776 ) 73 ( 4,703 )

Operating lease obligations, net of current maturities ( 7,407 ) 36 ( 7,371 )

Long-term debt ( 20 ) — ( 20 )

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

Goodwill $ 8,962 $ 501 $ 9,463

Huen Electric, Inc.

On July 2, 2018, the Company completed the acquisition of substantially all the assets of Huen Electric, Inc., an electrical contracting firm based in Illinois, Huen Electric New Jersey Inc., an electrical contracting firm based in New Jersey, and Huen New York, Inc., an electrical contracting firm based in New York (collectively, the “Huen Companies”).

The Huen Companies provide a wide range of commercial and industrial electrical construction capabilities under the Company’s C&I segment in Illinois, New Jersey and New York.

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 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.

The contracts are 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, 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 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.

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

Payment of amounts earned, if any, as defined in the purchase agreement, will be made in 2024 and are included in other liabilities on the Company’s consolidated balance sheets.

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.

For the year ended December 31, 2021, 2020 and 2019 the Company recognized $ 5.4 million, $ 4.0 million and $ 0.4 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 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.

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

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

Contract assets consisted of the following at December 31:

(in thousands) 2021 2020 Change

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

Unbilled revenue, net $ 134,187 $ 97,543 $ 36,644

Contract retainages, net 90,888 88,260 2,628

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

The Company’s consolidated balance sheets present contract liabilities which contains deferred revenue (previously identified as billings in excess of costs and estimated earnings on uncompleted contracts) and an accrual for contracts in a loss provision.

Contract assets, net $ 225,075 $ 185,803 $ 39,272

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

Contract liabilities consisted of the following at December 31:

3 unchanged sentences

Contract liabilities $ 167,931 $ 158,396 $ 9,535

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

The following table provides information about contract assets and contract liabilities from contracts with customers at December 31:

(in thousands) 2021 2020 Change

2 unchanged sentences

Net contract assets (liabilities) $ 57,144 $ 27,407 $ 29,737

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 along with contract assets and contract liabilities acquired in the CSI acquisition.

The amounts of revenues recognized in the period that were included in the opening contract liability balances were $ 116.5 million and $ 72.2 million for the year ended December 31, 2021 and 2020, respectively.

7 unchanged sentences

(in thousands) 2021 2020

Unbilled revenue $ 97,543 $ 126,087

Unbilled revenue, net $ 134,187 $ 97,543

Deferred revenue ( 165,699 ) ( 155,570 )

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Operating lease obligations, net of current maturities 13,230 15,730

Finance lease obligations

Finance lease obligations, net of current maturities — 338

Total non-current obligations

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Operating lease cost 10,217 9,378

Short-term lease cost — 8

Variable lease costs 317 335

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Right-of-use asset obtained in exchange for new operating lease obligations $ 7,459 $ 6,764

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) 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

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 and operating lease obligations, net of current maturities, as of December 31, 2021 were as follows:

(in thousands) Operating Lease

Thereafter 10

2 unchanged sentences

Net present value of minimum lease payments 20,995

current portion of finance and operating lease obligations ( 318 ) ( 6,612 ) ( 6,930 )

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

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

current portion of operating lease obligations ( 7,765 )

Long-term operating lease obligations $ 13,230

The financing component for operating lease obligations represents the effect of discounting the lease payments to their present value.

As of December 31, 2021, the Company had no outstanding finance lease obligations.

Certain subsidiaries of the Company have operating leases for facilities from third party companies that are owned, in whole or part, by employees of the subsidiaries.

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The Company’s long-term debt was based on variable and fixed interest rates at December 31, 2021 and 2020.

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 finance lease obligations and long term debt with fixed interest rates also approximated fair value.

Long-term debt, if any, with variable interest rates are 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 long term debt with fixed interest rates also approximated fair value.

Accounts Receivable

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Balance at end of period $ 2,441 $ 1,696 $ 3,364

Prepaid Expenses and Other Current Assets

Prepaid expense and other current assets consisted of the following at December 31:

(in thousands) 2021 2020

Prepaid expenses $ 44,677 $ 28,305

Other current assets 887 577

$ 45,564 $ 28,882

Property and Equipment

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Profit sharing and thrift plan 11,175 10,763

Net asset adjustments — 987

Joint venture liability — 652

Other 12,598 9,880

$ 94,857 $ 86,718

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:

12 unchanged sentences

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

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 4,503 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”), 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.

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.

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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 year ended December 31, 2020 was 2.35 % per annum.

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).

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

As of December 31, 2020, the Company had 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.

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.

As of December 31, 2021, the Company had no debt outstanding under the Facility and letters of credit outstanding under the Facility of approximately $ 12.3 million, which are almost entirely 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 $ 0.8 million as of December 31, 2021, 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.

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

The Company has entered into a Master Equipment Loan and Security Agreement (the “Master Loan Agreement”) with multiple lending banks.

The Master Loan Agreement may be used for the financing of equipment between the Company and lending banks pursuant to one or more “Equipment Notes”.

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, 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:

The Company has entered into Master Equipment Loan and Security Agreements (the “Master Loan Agreements”) with multiple banks.

The Master Loan Agreements may be used for the financing of equipment between the Company and the lending banks pursuant to one or more equipment notes “Equipment Note”.

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

As of December 31, 2021, the Company had one Equipment Note outstanding under the Master Loan Agreement that is collateralized by equipment and vehicles owned by the Company.

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

(in thousands)

28 unchanged sentences

T&E 372,016 28.6 159,399 13.3 531,415 21.3

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

$ 1,301,587 100.0 % $ 1,196,702 100.0 % $ 2,498,289 100.0 %

4 unchanged sentences

T&E 308,133 26.7 111,659 10.2 419,792 18.7

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

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

4 unchanged sentences

T&E 341,916 30.2 182,061 19.5 523,977 25.3

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

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

8 unchanged sentences

On December 31, 2021, the Company had $ 1.68 billion of remaining performance obligations.

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

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.

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 December 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 as of December 31, 2021

16 unchanged sentences

Federal $ 16,512 $ 19,014 $ 6,976

Foreign 1,947 — —

State 6,560 6,363 3,562

18 unchanged sentences

Global intangible low tax income — 0.9 0.3

Section 162(m) limitation 1.1 0.5 0.3

Non-controlling interest — — 0.9

8 unchanged sentences

Bonus 8,373 6,173

Accrued vacation 1,977 1,741

Accrued profit sharing 2,665 2,476

Operating lease liabilities 5,404 5,715

9 unchanged sentences

deferred income tax liabilities — ( 1,322 )

Contract revenue adjustment ( 4,526 ) ( 2,128 )

Other ( 213 ) ( 436 )

12 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 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 decrease in the unrecognized tax benefits as of December 31, 2021 was primarily due to the lapses in the applicable statutes of limitations.

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

4 unchanged sentences

Gross increases in current period tax positions 45 217

Settlements with taxing authorities — ( 88 )

Reductions in tax positions due to lapse of statutory limitations ( 70 ) ( 16 )

6 unchanged sentences

Purchase Commitments

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 .

As of December 31, 2021, the Company had approximately $ 9.2 million in outstanding purchase orders for certain construction equipment, with cash payments scheduled to occur over the next eight months .

Insurance and Claims Accruals

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

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

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

The Company also maintains excess umbrella coverage providing higher layers of insurance coverage for losses that exhaust the limits of underlying coverage.

A layer of this umbrella coverage requires the Company to pay a portion of any loss within a certain loss range and our potential exposure for such losses is up to approximately $ 3.8 million.

The Company’s health benefit plans are subject to stop-loss limits of up to $ 0.2 million for qualified individuals.

13 unchanged sentences

As of December 31, 2021, an aggregate of approximately $ 1.39 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.

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

Additionally, from time to time the Company is required to post letters of credit to guarantee the obligations of its wholly owned subsidiaries, which reduces the borrowing availability under our Facility.

The Company estimated the remaining cost to complete these bonded projects was approximately $ 607.0 million as of December 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.

From time to time, pursuant to its service arrangements, the Company indemnifies its customers for claims related to the services it provides under those service arrangements.

11 unchanged sentences

With respect to all such lawsuits, claims and proceedings, the Company records reserves when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated.

The Company does not believe that any of these proceedings, separately or in the aggregate, would be expected to have a material adverse effect on the Company’s financial position, results of operation or cash flows.

The Company is routinely subject to other civil claims, litigation and arbitration, and regulatory investigations arising in the ordinary course of our present business as well as in respect of our divested businesses.

9 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.

28 unchanged sentences

2,355 $ 24.68 1.2 years

$ 24.68 – $ 24.68

2,709 $ 23.74 1.1 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 2020 vest ratably on April 27, 2021, March 23, 2022 and March 23, 2023.

Time-vested stock awards granted under the LTIP to eligible employees in 2021 vest ratably on an annual basis, over three years .

Time-vested stock awards granted under the LTIP to non-employee directors in 2021 vest over a one year period.

41 unchanged sentences

Granted at target 79,788 $ 34.10

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

Earned for performance above target 14,962 $ 69.45

Vested ( 78,260 ) $ 48.86

2 unchanged sentences

Granted at target 42,091 $ 80.11

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

Earned for performance above target 58,461 $ 40.41

Vested ( 128,920 ) $ 39.26

5 unchanged sentences

This included $ 3.6 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 1.4 years and $ 5.0 million of unrecognized compensation cost related to unvested performance awards, expected to be recognized over a remaining weighted average vesting period of approximately 1.4 years.

Time-vested stock awards granted to non-employee directors in 2020 and 2019 vest at the end of a one-year period and those granted prior to 2019 vest over a period of three years .

The grant provision of the time-vested stock awards granted to non-employee directors prior to 2019 contained provisions that call for the vesting of all shares awarded upon a change in control or resignation from the board for any reason except breach of fiduciary duty.

As a result of these provisions, the fair value of time-vested stock awards granted to all directors in 2018, was expensed on the date of the grant.

Employee Benefit Plans

4 unchanged sentences

Total contributions for the years ended December 31, 2021, 2020 and 2019 amounted to $ 17.8 million, $ 16.8 million, and $ 10.9 million, respectively.

The increase in contributions for the year ended December 31, 2020 was due to an increase in profit sharing and the acquisition of CSI.

The Company contributes to a number of multiemployer defined benefit pension plans under the terms of collective-bargaining agreements that cover its union-represented employees, who are represented by more than 300 local unions.

21 unchanged sentences

Defined Benefit Plans:

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

Southern California IBEW-NECA Pension Trust Fund 95-6392774 001 Yellow 6/30/2020 Yellow 6/30/2019 $ 39,529 $ 32,791 $ 14,268 Yes No

National Electrical Benefit Fund 53-0181657 001 Green 12/31/2020 Green 12/31/2019 11,627 10,850 11,050 No No

23 unchanged sentences

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, 2020 and 2019.

Another of the company’s subsidiaries was listed in the Southern California IBEW-NECA Pension Trust Fund Plan’s Form 5500 as providing more than 5 percent of the total contributions to that plan for the plan year ended June 30, 2020.

Segment Information

MYR Group is a holding company of specialty contractors serving electrical utility infrastructure and commercial construction markets in the United States and western Canada.

MYR Group is a holding company of specialty contractors serving electrical utility infrastructure and commercial construction markets in the United States and Canada.

The Company has two reporting segments, each a separate operating segment, which are referred to as T&D and C&I.

4 unchanged sentences

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.

T&D services include the construction and maintenance of high voltage transmission lines, substations, lower voltage underground and overhead distribution systems, renewable power facilities and limited gas construction services.

The T&D segment also provides emergency restoration services in response to hurricane, ice or other storm-related damage.

30 unchanged sentences

$ 46,205 $ 46,453 $ 44,516

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, 2021 and 2020, there were $ 23.1 million and $ 23.2 million, respectively, of identifiable assets attributable to Canadian operations.

5 unchanged sentences

The acquired joint venture made no distributions to its partners, and the Company made no capital contributions to the joint venture during the year ended December 31, 2021.

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

Additionally, the joint venture was dissolved during the year ended December 31, 2021, and the underlying project was substantially completed in 2019.

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.

Net loss recognized during the year ended December 31, 2021 was not significant.

Earnings Per Share

11 unchanged sentences

Net income $ 85,006 $ 58,759 $ 36,214

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

net loss attributable to noncontrolling interest ( 4 ) — ( 1,476 )

Net income attributable to MYR Group Inc.

8 unchanged sentences

All of the Company’s non-participating unvested restricted shares were included in the computation of weighted average dilutive securities.

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

(in thousands) 2021 2020 2019

Time-vested stock awards — — 1

Performance awards — 34 73

Share Repurchase Program

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 2021 and 2020, the Company repurchased 51,113 and 24,910 shares of stock, respectively, for approximately $ 3.4 million and $ 0.7 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.

Quarterly Financial Data (Unaudited)

The following table presents the unaudited consolidated operating results by quarter for the years ended December 31, 2020 and 2019:

For the Three Months Ended

(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.

Subsequent Event

On January 4, 2022, the Company acquired all issued and outstanding shares of capital stock of Powerline Plus Ltd.

and its affiliate PLP Redimix Ltd.

(collectively, the “Powerline Plus Companies"), a full-service electrical distribution construction company based in Toronto, Ontario.

Consideration paid was approximately $ 114.4 million, subject to working capital and net asset adjustments, and was funded through a combination of cash on hand and borrowings under the Facility.

There could be additional contingent consideration paid based on the achievement of certain performance targets.

The results of Powerline Plus Companies will be included in the Company’s consolidated financial statements beginning on the transaction date.

Approximately $ 0.2 million of acquisition-related costs associated with this acquisition were expensed by the Company in the year ended December 31, 2021.

Due to the timing of the acquisition, preliminary purchase price allocation has not yet been completed.

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