What changed in this filing

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Item 1. Financial Statements

2022-04-27 compared with 2021-10-27 · 153 added, 174 removed, 460 unchanged (42% 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,

2022 December 31,

7 unchanged sentences

Refundable income taxes 5,557 9,228

Other current assets 26,579 28,882

Prepaid expenses and other current assets 50,071 45,564

Total current assets 715,595 748,390

17 unchanged sentences

Current portion of accrued self-insurance 25,916 24,242

Accrued income taxes 2,866 2,021

Other current liabilities 68,969 94,857

4 unchanged sentences

Operating lease obligations, net of current maturities 23,180 13,230

Finance lease obligations, net of current maturities 3,001 —

Other liabilities 22,778 11,261

4 unchanged sentences

4,000,000 authorized shares;

none issued and outstanding at September 30, 2021 and December 31, 2020

none issued and outstanding at March 31, 2022 and December 31, 2021

Common stock—$ 0.01 par value per share;

100,000,000 authorized shares;

16,869,947 and 16,734,239 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively

16,995,250 and 16,870,636 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively

Additional paid-in capital 159,256 163,754

1 unchanged sentence

Retained earnings 375,028 355,007

Total stockholders’ equity attributable to MYR Group Inc.

496,176 429,288

Noncontrolling interest 4 4

Total stockholders’ equity 536,278 519,102

4 unchanged sentences

Three months ended

September 30, Nine months ended

September 30,

(in thousands, except per share data) 2022 2021

20 unchanged sentences

Net income $ 20,688 $ 19,928

Other comprehensive income (loss):

Other comprehensive income:

Foreign currency translation adjustment 1,651 253

Other comprehensive income (loss):

( 589 ) ( 5 ) 77 43

Other comprehensive income:

Total comprehensive income $ 22,339 $ 20,181

9 unchanged sentences

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

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

Stock issued under compensation plans, net — 123 1 109 — — 110 — 110

4 unchanged sentences

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

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 loss — — — — ( 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

Net income — — — — — 17,292 17,292 — 17,292

Stock issued under compensation plans, net — 10 — 224 — — 224 — 224

Stock-based compensation expense — — — 1,631 — — 1,631 — 1,631

Other comprehensive income — — — — ( 5 ) — ( 5 ) — ( 5 )

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

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

Balance at December 31, 2021 $ — 16,871 $ 168 $ 163,754 $ 173 $ 355,007 $ 519,102 $ — $ 519,102

4 unchanged sentences

Other comprehensive income — — — — 1,651 — 1,651 — 1,651

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

Balance at March 31, 2022 $ — 16,995 $ 170 $ 159,256 $ 1,824 $ 375,028 $ 536,278 $ — $ 536,278

Net income — — — — — 21,219 21,219 — 21,219

Stock issued under compensation plans, net — 60 1 318 — — 319 — 319

Stock-based compensation expense — — — 1,948 — — 1,948 — 1,948

Shares repurchased — ( 10 ) ( 1 ) ( 637 ) — ( 96 ) ( 734 ) — ( 734 )

Other comprehensive income — — — — 413 — 413 — 413

Balance at June 30, 2021 — 16,867 168 159,624 689 311,144 471,625 4 471,629

Net income — — — — — 23,171 23,171 — 23,171

Stock issued under compensation plans, net — 3 — 54 — — 54 — 54

Stock-based compensation expense — — — 1,915 — — 1,915 — 1,915

Other comprehensive income — — — — ( 589 ) — ( 589 ) — ( 589 )

Balance at September 30, 2021 $ — 16,870 $ 168 $ 161,593 $ 100 $ 334,315 $ 496,176 $ 4 $ 496,180

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) 2022 2021

8 unchanged sentences

Other non-cash items 886 529

Changes in operating assets and liabilities, net of acquisitions:

Changes in operating assets and liabilities, net of acquisition:

Accounts receivable, net 2,902 12,592

9 unchanged sentences

Proceeds from sale of property and equipment 1,027 651

Cash paid for acquired business, net of cash acquired ( 110,576 ) —

Purchases of property and equipment ( 14,037 ) ( 7,031 )

1 unchanged sentence

Cash flows from financing activities:

Net repayments under revolving lines of credit — ( 65,189 )

Payment of principal obligations under equipment notes ( 24,409 ) ( 30,441 )

Net borrowings under revolving lines of credit 45,193 —

Payment of principal obligations under finance leases ( 437 ) ( 273 )

Proceeds from exercise of stock options 4 110

Repurchase of common shares ( 3,352 ) ( 426 )

Payments related to tax withholding for stock-based compensation ( 6,791 ) ( 2,618 )

Other financing activities — 12

Net cash flows used in financing activities ( 27,603 ) ( 96,604 )

Net cash flows provided by (used in) financing activities 37,969 ( 2,769 )

Effect of exchange rate changes on cash 790 160

Net increase in cash and cash equivalents 50,338 6,549

Net increase (decrease) in cash and cash equivalents ( 63,360 ) 50,401

Cash and cash equivalents:

7 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:

1 unchanged sentence

T&D customers include investor-owned utilities, cooperatives, private developers, government-funded utilities, independent power producers, independent transmission companies, industrial facility owners and other contractors.

T&D provides a broad range of services, which include design, engineering, procurement, construction, upgrade, maintenance and repair services, with a particular focus on construction, maintenance and repair.

T&D provides a broad range of services on electric transmission, distribution networks, substation facilities and clean energy projects include design, engineering, procurement, construction, upgrade, maintenance and repair services.

C&I customers include general contractors, commercial and industrial facility owners, government agencies and developers.

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

C&I provides a broad range of services, which include the design, installation, maintenance and repair of commercial and industrial wiring.

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

Basis of Presentation

9 unchanged sentences

The results of operations and comprehensive income are not necessarily indicative of the results for the full year or the results for any future periods.

These financial statements should be read in conjunction with the audited financial statements and related notes for the year ended December 31, 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").

These financial statements should be read in conjunction with the audited financial statements and related notes for the year ended December 31, 2021, included in the Company’s Annual Report on Form 10-K, which was filed with the SEC on February 23, 2022 (the "2021 Annual Report").

Joint Ventures and Noncontrolling Interests

8 unchanged sentences

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 and nine months ended September 30, 2021.

Additionally, there have been no changes in ownership during the three and nine months ended September 30, 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 Company’s consolidated statements of operations.

Foreign currency losses, recorded in other income, net, for the nine months ended September 30, 2021 were $ 0.1 million.

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

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 (expense), net” line on the Company’s consolidated statements of operations.

Foreign currency gains and losses, recorded in other income, net, for the three months ended March 31, 2022 and 2021 were no t significant.

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 Company’s consolidated statements of comprehensive income.

3 unchanged sentences

Actual results could differ from those estimates.

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

The most significant estimates are related to estimates of costs to complete contracts, pending change orders and claims, shared savings, insurance reserves, income tax reserves, estimates surrounding stock-based compensation, acquisition-related contingent earn-out consideration liabilities, the recoverability of goodwill and intangibles and allowance for doubtful accounts.

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

As of September 30, 2021 and 2020, the Company had recognized revenues of $ 4.0 million and $ 19.1 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, 2022 and 2021, the Company had recognized revenues of $ 11.4 million and $ 14.0 million, respectively, related to large change orders and/or claims that had been included as contract price adjustments on certain contracts, some of which are multi-year projects.

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

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

During the three months ended September 30, 2021, changes in estimates pertaining to certain projects increased consolidated gross margin by 1.4 %, which resulted in increases in operating income of $ 8.2 million, net income of $ 5.9 million and diluted earnings per common share of $ 0.35 .

During the nine months ended September 30, 2021, changes in estimates pertaining to certain projects increased consolidated gross margin by 0.4 %, which resulted in increases in operating income of $ 7.2 million, net income of $ 5.2 million and diluted earnings per common share of $ 0.30 .

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 of $ 1.5 million and diluted earnings per common share of $ 0.09 .

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 of $ 5.5 million and diluted earnings per common share of $ 0.33 .

During the three months ended March 31, 2022, changes in estimates pertaining to certain projects increased consolidated gross margin by 0.5 %, which resulted in increases in operating income of $ 3.8 million, net income of $ 2.7 million and diluted earnings per common share of $ 0.16 .

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 .

Recent Accounting Pronouncements

3 unchanged sentences

The Company, based on its assessment, determined that any recently issued or proposed ASUs not listed below are either not applicable to the Company or adoption will have minimal impact on its consolidated financial statements.

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

Recently Issued Accounting Pronouncements

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.

Powerline Plus Ltd

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, funded through a combination of cash on hand and borrowings under the Facility (as defined below), was $ 110.6 million, net of cash acquired, and is subject to working capital and net asset adjustments.

Additionally, the acquisition includes contingent earn-out consideration that may be payable if the Powerline Plus Companies achieve certain performance targets over a three -year post-acquisition period.

As of the acquisition date, the fair value of the contingent earn-out consideration was $ 10.6 million.

The future payout of the contingent earn-out consideration, if any, is unlimited and could be significantly higher than the acquisition date fair value.

If the minimum thresholds of the performance targets are achieved the contingent earn-out consideration payment will be approximately $ 17.7 million.

There were no changes in contingent earn-out consideration, subsequent to the acquisition, for the three months ended March 31, 2022.

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

Approximately $ 0.1 million of acquisition-related costs associated with this acquisition were expensed by the Company during the three months ended March 31, 2022.

The purchase agreement also includes contingent consideration provisions for down-side margin guarantee adjustments based upon certain 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.

Unfavorable 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 margin guarantee adjustments on contracts, subsequent to the acquisition, were recorded in other income and were not significant for the three months ended March 31, 2022.

Future margin guarantee adjustments, if any, are expected to be recognized through 2022 and possibly in early 2023.

The following table summarizes the allocation of the opening balance sheet as of the date of the Powerline Plus Companies acquisition:

(in thousands) (as of acquisition date) January 4, 2022

Cash paid $ 114,429

Contingent consideration - fair value at acquisition date 10,608

Preliminary estimated net asset adjustments 563

Total consideration, net of estimated net asset adjustments 125,600

Acquired cash ( 3,853 )

Total consideration less cash acquired, net of estimated net asset adjustments $ 121,747

Cash and cash equivalents $ 3,853

Accounts receivable, net 12,131

Contract assets, net 12,443

Refundable income taxes 394

Prepaid expenses and other current assets 1,233

Property and equipment 10,366

Operating lease right-of-use assets 6,631

Accounts payable ( 8,095 )

Contract liabilities ( 1,597 )

Accrued income taxes ( 686 )

Current portion of operating lease obligations ( 1,224 )

Current portion of finance lease obligations ( 1,492 )

Deferred income tax liabilities ( 672 )

Operating lease obligations, net of current maturities ( 4,897 )

Finance lease obligations, net of current maturities ( 3,243 )

Net identifiable assets and liabilities 25,145

Unallocated intangible assets 56,650

Total acquired assets and liabilities 81,795

Goodwill $ 43,805

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

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

No synergies were anticipated in the acquisition as the Powerline Plus Companies will function as an individual business within the Company’s operating structure.

Further adjustments are expected to the allocation as third party valuations of contingent earn-out consideration, acquired right-of-use assets and lease liabilities and identifiable intangible assets, including backlog, customer relationships, trade name and off-market component, are determined, and as net asset adjustments are finalized.

Additionally, the Company is currently performing an analysis of the purchase price allocation and will make appropriate adjustments based on the analysis.

A portion of the goodwill and identifiable intangible assets are expected to be tax deductible per applicable Canadian Revenue Authority regulations.

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 $ 0.4 million as of September 30, 2021 and December 31, 2020.

The allowance for doubtful accounts associated with contract assets was $ 0.4 million as of March 31, 2022 and December 31, 2021.

Contract assets consisted of the following:

(in thousands) September 30,

(in thousands) March 31,

2022 December 31,

4 unchanged sentences

Contract liabilities consisted of the following:

(in thousands) September 30,

(in thousands) March 31,

2022 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,

2022 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 $ 13.8 million and $ 98.0 million for the three and nine months ended September 30, 2021, respectively.

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.

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

The amounts of revenue recognized in the period that were included in the opening contract liability balances were $ 17.9 million and $ 41.4 million for the three months ended March 31, 2022 and 2021, respectively.

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

(in thousands) September 30,

(in thousands) March 31,

2022 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,

2022 December 31,

5 unchanged sentences

These leases allow the Company to conserve cash by paying a monthly lease rental fee for the use of facilities, vehicles and equipment rather than purchasing them.

The Company’s leases have remaining terms ranging from one to six years , some of which may include options to extend the leases for up to five years , and some of which may include options to terminate the leases within one year .

The Company’s leases have remaining terms ranging from one to eight years , some of which may include options to extend the leases for up to five years , and some of which may include options to terminate the leases within one year .

Currently, all the Company’s leases contain fixed payment terms.

1 unchanged sentence

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

At March 31, 2022, 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,

2022 December 31,

7 unchanged sentences

Operating lease obligations Operating lease obligations, net of current maturities 23,180 13,230

Finance lease obligations Finance lease obligations, net of current maturities 3,001 —

Total non-current obligations 26,181 13,230

1 unchanged sentence

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

September 30,

2022 December 31,

Weighted-average remaining lease term - finance leases zero years 0.4 years

Weighted-average remaining lease term - finance leases 2.4 years 0.0 years

Weighted-average remaining lease term - operating leases 3.9 years 2.9 years

3 unchanged sentences

(in thousands) Three months ended

September 30, Nine months ended

September 30,

2021 2020 2021 2020

Finance lease cost:

5 unchanged sentences

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) 2022 2021

3 unchanged sentences

Right-of-use asset obtained in exchange for new operating lease obligations $ 4,392 $ 1,502

The future undiscounted minimum lease payments, as reconciled to the discounted minimum lease obligation indicated on the Company’s consolidated balance sheets under operating leases, less imputed interest, as of September 30, 2021 were as follows:

(in thousands) Operating Lease

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 March 31, 2022 were as follows:

(in thousands) Finance

Lease Obligations Operating Lease

Obligations Total

Remainder of 2022

$ 1,158 $ 9,132 $ 10,290

2023 1,157 10,174 11,331

2024 2,056 7,178 9,234

2025 186 5,080 5,266

2026 — 3,963 3,963

2027 — 770 770

Thereafter — 1,398 1,398

5 unchanged sentences

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

As of September 30, 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.

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

As of September 30, 2021, the minimum lease payments required under these leases totaled $ 2.5 million, which are due over the next 2.8 years.

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

As of March 31, 2022, the minimum lease payments required under these leases totaled $ 8.7 million, which are due over the next 4.8 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, 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 September 30, 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 September 30, 2021 and December 31, 2020, for new issues with similar remaining maturities, and approximated carrying value.

As of March 31, 2022 and December 31, 2021, the Company determined that the carrying value of cash and cash equivalents approximated fair value based on Level 1 inputs.

As of March 31, 2022 and December 31, 2021, 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, 2022 and December 31, 2021, 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.

As of March 31, 2022, the fair values of the Company’s contingent earn-out consideration liability associated with the acquisition of the Powerline Plus Companies was based on Level 3 inputs.

The contingent earn-out consideration recorded represent the estimated fair values of future amounts potentially payable to the former owners of the acquired Powerline Plus Companies and was initially determined using a Monte Carlo simulation valuation methodology based on probability-weighted performance projections and other inputs, including a discount rate and an expected volatility factor.

The fair value of this contingent earn-out consideration liability will be evaluated on an ongoing basis by management.

Accordingly, the level of inputs used for these fair value measurements is the lowest level (Level 3).

Significant changes in any of these assumptions could result in a significantly higher or lower potential liability.

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

4 unchanged sentences

Balance as of

September 30, 2021

March 31, 2022

Balance as of

4 unchanged sentences

Equipment Note 8 12/27/2019 2.75 % Semi-annual 5 4,503 4,503

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

Equipment Note 8 12/27/2019 2.75 % Semi-annual 5 5,011 5,513

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

Total debt 49,696 4,503

17 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 three months ended March 31, 2022 was 1.34 % 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).

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, 2021.

As of September 30, 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 $ 0.9 million as of September 30, 2021, related to the line of credit.

The Company was in compliance with all of its financial covenants under the Credit Agreement as of March 31, 2022.

As of March 31, 2022, the Company had $ 45.2 million of 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, 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.

The Company had remaining deferred debt issuance costs totaling $ 0.8 million as of March 31, 2022, 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.

3 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, 2021, the Company had one Equipment Note outstanding under the Master Loan Agreements 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 September 30, 2021:

As of March 31, 2022, the Company had one Equipment Note outstanding under the Master Loan Agreements 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 March 31, 2022:

(in thousands) Future

23 unchanged sentences

Additional information related to the Company’s market types is provided in Note 11–Segment Information.

The components of the Company’s revenue by contract type for the three and nine months ended September 30, 2021 and 2020 were as follows:

Three months ended September 30, 2021

T&D C&I Total

(dollars in thousands) Amount Percent Amount Percent Amount Percent

Fixed price $ 122,185 39.9 % $ 246,803 81.3 % $ 368,988 60.5 %

Unit price 83,200 27.1 21,567 7.1 104,767 17.2

T&E 101,161 33.0 35,266 11.6 136,427 22.3

$ 306,546 100.0 % $ 303,636 100.0 % $ 610,182 100.0 %

Three months ended September 30, 2020

T&D C&I Total

(dollars in thousands) Amount Percent Amount Percent Amount Percent

Fixed price $ 126,588 42.2 % $ 248,577 80.7 % $ 375,165 61.7 %

Unit price 88,708 29.6 22,587 7.3 111,295 18.3

T&E 84,443 28.2 36,998 12.0 121,441 20.0

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

The components of the Company’s revenue by contract type for the nine months ended September 30, 2021 and 2020 were as follows:

Nine months ended September 30, 2021

The components of the Company’s revenue by contract type for the three months ended March 31, 2022 and 2021 were as follows:

Three months ended March 31, 2022

T&D C&I Total

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$ 364,856 100.0 % $ 271,768 100.0 % $ 636,624 100.0 %

Nine months ended September 30, 2020

Three months ended March 31, 2021

T&D C&I Total

4 unchanged sentences

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

The components of the Company’s revenue by market type for the three months ended September 30, 2021 and 2020 were as follows:

Three months ended September 30, 2021 Three months ended September 30, 2020

(dollars in thousands) Amount Percent Segment Amount Percent Segment

$ 165,953 27.2 % T&D $ 185,007 30.4 % T&D

140,593 23.0 T&D 114,732 18.9 T&D

Electrical construction

303,636 49.8 C&I 308,162 50.7 C&I

Total revenue $ 610,182 100.0 % $ 607,901 100.0 %

The components of the Company’s revenue by market type for the nine months ended September 30, 2021 and 2020 were as follows:

Nine months ended September 30, 2021 Nine months ended September 30, 2020

The components of the Company’s revenue by market type for the three months ended March 31, 2022 and 2021 were as follows:

Three months ended March 31, 2022 Three months ended March 31, 2021

(dollars in thousands) Amount Percent Segment Amount Percent Segment

5 unchanged sentences

Remaining Performance Obligations

As of September 30, 2021, the Company had $ 1.51 billion of remaining performance obligations.

As of March 31, 2022, the Company had $ 2.28 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, 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 September 30, 2021

The following table summarizes the amount of remaining performance obligations as of March 31, 2022 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, 2022

(in thousands) Total Amount estimated to not be

7 unchanged sentences

“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, 2021 and 2020.

The Company’s effective tax rate for the three and nine months ended September 30, 2021 was 24.6 % and 25.9 %, respectively, of pretax income compared to the effective tax rate for the three and nine months ended September 30, 2020 of 27.4 % and 27.7 %, respectively.

federal statutory tax rate was 21 % for each of the three months ended March 31, 2022 and 2021.

The Company’s effective tax rate for the three months ended March 31, 2022 was 15.4 % of pretax income compared to the effective tax rate for the three months ended March 31, 2021 of 26.2 %.

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, 2021 was primarily due to state income taxes, foreign earnings and other permanent difference items, partially offset by a favorable impact from stock compensation excess tax benefits.

federal statutory tax rate and the Company’s effective tax rate for the three months ended March 31, 2022, was primarily due to a favorable impact from stock compensation excess tax benefits partially offset by state income taxes, foreign earnings and other permanent difference items.

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.

The Company had unrecognized tax benefits of approximately $ 0.5 million and $ 0.4 million as of September 30, 2021 and December 31, 2020, respectively, 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, 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 Company had unrecognized tax benefits of approximately $ 0.4 million as of March 31, 2022 and December 31, 2021, 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, 2021 and 2020.

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, 2022 and 2021.

The Company is subject to taxation in various jurisdictions.

4 unchanged sentences

Purchase Commitments

As of September 30, 2021, the Company had approximately $ 11.2 million in outstanding purchase orders for certain construction equipment, with cash payments scheduled to occur over the next eight months .

As of March 31, 2022, the Company had approximately $ 17.2 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 Company has indemnified its sureties for any expenses paid out under these bonds.

As of September 30, 2021, an aggregate of approximately $ 1.28 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 $ 531.5 million as of September 30, 2021.

As of March 31, 2022, an aggregate of approximately $ 1.46 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 $ 579.7 million as of March 31, 2022.

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.

7 unchanged sentences

If a subsidiary withdraws from any of the multi-employer pension plans or if the plans were to otherwise become underfunded, the subsidiary could incur liabilities for additional contributions related to these plans.

Although the Company has been informed that the underfunding of some of the multi-employer pension plans to which its subsidiaries contribute have been classified as “critical” status, the Company is not currently aware of any potential liabilities related to this issue.

Although the Company has been informed that the underfunding status of some of the multi-employer pension plans to which its subsidiaries contribute have been classified as “critical” status, the Company is not currently aware of any potential liabilities related to this issue.

Litigation and Other Legal Matters

12 unchanged sentences

The Company has outstanding grants of non-qualified stock options, time-vested stock awards in the form of restricted stock units and internal metric-based and market-based performance stock units.

During the nine months ended September 30, 2021, the Company granted time-vested stock awards covering 57,196 shares of common stock under the LTIP, which vest ratably over three years for employee awards and after one year for non-employee director awards, at a weighted average grant date fair value of $ 66.80 .

During the nine months ended September 30, 2021, time-vested stock awards covering 87,584 shares of common stock vested at a weighted average grant date fair value of $ 29.20 .

During the nine months ended September 30, 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 .

During the three months ended March 31, 2022, the Company granted time-vested stock awards covering 35,659 shares of common stock under the LTIP, which vest ratably over three years , at a weighted average grant date fair value of $ 99.22 .

During the three months ended March 31, 2022, time-vested stock awards covering 64,133 shares of common stock vested at a weighted average grant date fair value of $ 38.66 .

During the three months ended March 31, 2022, the Company granted 31,603 performance share awards under the LTIP at target, which will cliff vest, if earned, on December 31, 2024, at a weighted average grant date fair value of $ 118.82 .

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.

1 unchanged sentence

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 nine months ended September 30, 2021, plan participants exercised options to purchase 21,117 shares of the Company’s common stock with a weighted average exercise price of $ 22.88 .

During the three months ended March 31, 2022, plan participants exercised options to purchase 236 shares of the Company’s common stock with a weighted average exercise price of $ 17.48 .

The Company recognizes stock-based compensation expense related to restricted stock units based on the grant date fair value, which was the closing price of the Company’s stock on the date of grant.

5 unchanged sentences

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.

5 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 and lower voltage underground and overhead distribution systems and clean energy projects.

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

1 unchanged sentence

Commercial and Industrial:

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

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

The C&I segment provides services such as the design, installation, maintenance and repair of commercial and industrial wiring, the installation of intelligent transportation systems and roadway lighting.

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

The C&I segment generally provides electric construction and maintenance services as a subcontractor to general contractors in the C&I industry, but also contracts directly with facility owners.

2 unchanged sentences

Three months ended

September 30, Nine months ended

September 30,

(in thousands) 2022 2021

13 unchanged sentences

Three months ended

September 30, Nine months ended

September 30,

(in thousands, except per share data) 2022 2021

6 unchanged sentences

Diluted $ 1.21 $ 1.17

For the three and nine months ended September 30, 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.

For the three months ended March 31, 2022 and 2021, 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) 2022 2021

Time-vested stock awards 36 48

Performance awards 32 42

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