MYR GROUP INC. 10-Q

ITEM 1. FINANCIAL STATEMENTS MYR GROUP INC. CONSOLIDATED BALANCE SHEETS ​ (in thousands, except share and per share data) September 30, 2020 December 31, 2019 ​ (unaudited) ASSETS Current assets: Cash and cash equivalents $ 18,946 $ 12,397 Accounts receivable, net of allowances of $ 1,761 and $ 3,364 , respectively 400,998 388,479 Contract assets, net of allowances of $ 502 and $ 147 , respectively 221,591 217,109 Current portion of receivable for insurance claims in excess of deductibles 9,851 6,415 Refundable income taxes — 1,973 Other current assets 7,376 12,811 Total current assets 658,762 639,184 Property and equipment, net of accumulated depreciation of $ 290,088 and $ 272,865 , respectively 185,914 185,344 Operating lease right-of-use assets 22,620 22,958 Goodwill 66,055 66,060 Intangible assets, net of accumulated amortization of $ 13,889 and $ 10,880 , respectively 51,918 54,940 Receivable for insurance claims in excess of deductibles 24,437 30,976 Investment in joint ventures 4,972 4,722 Other assets 4,233 3,687 Total assets $ 1,018,911 $ 1,007,871 ​ LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Current portion of long-term debt $ 4,318 $ 8,737 Current portion of operating lease obligations 6,468 6,205 Current portion of finance lease obligations 607 1,135 Accounts payable 205,601 192,107 Contract liabilities 125,611 105,486 Current portion of accrued self-insurance 21,659 18,780 Other current liabilities 95,290 64,364 Total current liabilities 459,554 396,814 Deferred income tax liabilities 21,684 20,945 Long-term debt 65,876 157,087 Accrued self-insurance 42,884 48,024 Operating lease obligations, net of current maturities 16,230 16,884 Finance lease obligations, net of current maturities — 338 Other liabilities 4,079 3,304 Total liabilities 610,307 643,396 Commitments and contingencies Stockholders’ equity: Preferred stock—$ 0.01 par value per share; 4,000,000 authorized shares; none issued and outstanding at September 30, 2020 and December 31, 2019 — — Common stock—$ 0.01 par value per share; 100,000,000 authorized shares; 16,719,330 and 16,648,616 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively 167 166 Additional paid-in capital 156,461 152,532 Accumulated other comprehensive loss ( 403 ) ( 446 ) Retained earnings 252,375 212,219 Total stockholders’ equity attributable to MYR Group Inc. 408,600 364,471 Noncontrolling interest 4 4 Total stockholders’ equity 408,604 364,475 Total liabilities and stockholders’ equity $ 1,018,911 $ 1,007,871 ​ The accompanying notes are an integral part of these consolidated financial statements. 2 Table of Contents MYR GROUP INC. UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME ​ ​ Three months ended September 30, Nine months ended September 30, (in thousands, except per share data) 2020 2019 2020 2019 ​ ​ ​ ​ ​ Contract revenues $ 607,901 $ 583,214 $ 1,639,422 $ 1,500,084 Contract costs 531,429 524,017 1,440,013 1,354,848 Gross profit 76,472 59,197 199,409 145,236 Selling, general and administrative expenses 51,443 41,667 137,688 108,598 Amortization of intangible assets 578 1,419 3,009 2,888 Gain on sale of property and equipment ( 478 ) ( 1,151 ) ( 1,967 ) ( 2,548 ) Income from operations 24,929 17,262 60,679 36,298 Other income (expense): Interest income — — 6 — Interest expense ( 1,113 ) ( 2,125 ) ( 3,941 ) ( 4,498 ) Other income (expense), net 18 ( 922 ) ( 556 ) 406 Income before provision for income taxes 23,834 14,215 56,188 32,206 Income tax expense 6,542 3,754 15,579 8,767 Net income 17,292 10,461 40,609 23,439 Less: net income (loss) attributable to noncontrolling interest — 106 — ( 1,476 ) Net income attributable to MYR Group Inc. $ 17,292 $ 10,355 $ 40,609 $ 24,915 Income per common share attributable to MYR Group Inc.: —Basic $ 1.04 $ 0.62 $ 2.44 $ 1.50 —Diluted $ 1.02 $ 0.62 $ 2.42 $ 1.49 Weighted average number of common shares and potential common shares outstanding: —Basic 16,698 16,614 16,670 16,576 —Diluted 16,882 16,714 16,798 16,692 ​ Net income $ 17,292 $ 10,461 $ 40,609 $ 23,439 Other comprehensive income (loss): Foreign currency translation adjustment ( 5 ) 1 43 ( 199 ) Other comprehensive income (loss): ( 5 ) 1 43 ( 199 ) Total comprehensive income 17,287 10,462 40,652 23,240 Less: net income (loss) attributable to noncontrolling interest — 106 — ( 1,476 ) Total comprehensive income attributable to MYR Group Inc. $ 17,287 $ 10,356 $ 40,652 $ 24,716 ​ The accompanying notes are an integral part of these consolidated financial statements. 3 Table of Contents MYR GROUP INC. UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY ​ Preferred Common Stock Additional Paid-In Accumulated Other Comprehensive Retained MYR Group Inc. Stockholders’ Noncontrolling (in thousands) Stock Shares Amount Capital Income (Loss) Earnings Equity Interest Total ​ Balance at December 31, 2018 — 16,565 $ 165 $ 148,276 $ ( 193 ) $ 174,736 $ 322,984 $ 1,480 $ 324,464 Net income (loss) — — — — — 7,353 7,353 ( 733 ) 6,620 Stock issued under compensation plans, net — 68 — 282 — — 282 — 282 Stock-based compensation expense — — — 951 — — 951 — 951 Shares repurchased — ( 23 ) — ( 571 ) — ( 207 ) ( 778 ) — ( 778 ) Other comprehensive loss — — — — ( 77 ) — ( 77 ) — ( 77 ) Stock issued - other — — 12 — — — 12 — 12 Balance at March 31, 2019 — 16,610 177 148,938 ( 270 ) 181,882 330,727 747 331,474 Net income (loss) — — — — — 7,207 7,207 ( 849 ) 6,358 Stock issued under compensation plans, net — 33 1 1 — — 2 — 2 Stock-based compensation expense — — — 1,202 — — 1,202 — 1,202 Other comprehensive income — — — — ( 123 ) — ( 123 ) — ( 123 ) Stock issued - other — 1 ( 12 ) 36 — — 24 — 24 Balance at June 30, 2019 — 16,644 166 150,177 ( 393 ) 189,089 339,039 ( 102 ) 338,937 Net income — — — — — 10,355 10,355 106 10,461 Stock issued under compensation plans, net — — — 41 — — 41 — 41 Stock-based compensation expense — 2 — 1,108 — — 1,108 — 1,108 Other comprehensive income — — — — 1 — 1 — 1 Stock issued - other — 1 — 24 — — 24 — 24 Balance at September 30, 2019 $ — 16,647 $ 166 $ 151,350 $ ( 392 ) $ 199,444 $ 350,568 $ 4 $ 350,572 ​ Balance at December 31, 2019 — 16,649 $ 166 $ 152,532 $ ( 446 ) $ 212,219 $ 364,471 $ 4 $ 364,475 Net income — — — — — 9,932 9,932 — 9,932 Adjustment to adopt ASC 326 — — — — — ( 268 ) ( 268 ) — ( 268 ) Stock issued under compensation plans, net — 55 — 82 — — 82 — 82 Stock-based compensation expense — — — 1,080 — — 1,080 — 1,080 Shares repurchased — ( 20 ) — ( 241 ) — ( 185 ) ( 426 ) — ( 426 ) Other comprehensive income — — — — 87 — 87 — 87 Stock issued - other — 1 — 24 — — 24 — 24 Balance at March 31, 2020 — 16,685 166 153,477 ( 359 ) 221,698 374,982 4 374,986 Net income — — — — — 13,385 13,385 — 13,385 Stock issued under compensation plans, net — 23 1 — — — 1 — 1 Stock-based compensation expense — — — 1,093 — — 1,093 — 1,093 Other comprehensive income — — — — ( 39 ) — ( 39 ) — ( 39 ) Stock issued - other — 1 — 24 — — 24 — 24 Balance at June 30, 2020 — 16,709 167 154,594 ( 398 ) 235,083 389,446 4 389,450 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 ​ The accompanying notes are an integral part of these consolidated financial statements. 4 Table of Contents MYR GROUP INC. UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS ​ ​ Nine months ended September 30, (in thousands) 2020 2019 ​ ​ ​ Cash flows from operating activities: Net income $ 40,609 $ 23,439 Adjustments to reconcile net income to net cash flows provided by operating activities: Depreciation and amortization of property and equipment 32,021 30,153 Amortization of intangible assets 3,009 2,888 Stock-based compensation expense 3,804 3,261 Deferred income taxes 712 339 Gain on sale of property and equipment ( 1,967 ) ( 2,548 ) Other non-cash items 654 631 Changes in operating assets and liabilities, net of acquisitions: Accounts receivable, net ( 12,869 ) ( 27,327 ) Contract assets, net ( 4,754 ) ( 38,910 ) Receivable for insurance claims in excess of deductibles 3,103 1,626 Other assets 7,074 ( 771 ) Accounts payable 7,596 37,874 Contract liabilities 20,161 ( 397 ) Accrued self insurance ( 2,257 ) ( 358 ) Other liabilities 31,730 1,845 Net cash flows provided by operating activities 128,626 31,745 Cash flows from investing activities: Proceeds from sale of property and equipment 2,147 2,898 Cash paid for acquired business — ( 79,720 ) Purchases of property and equipment ( 27,470 ) ( 39,354 ) Net cash flows used in investing activities ( 25,323 ) ( 116,176 ) Cash flows from financing activities: Net borrowings (repayments) under revolving lines of credit ( 65,189 ) 67,668 Borrowings under equipment notes — 24,037 Payment of principal obligations under equipment notes ( 30,441 ) ( 3,307 ) Payment of principal obligations under finance leases ( 914 ) ( 857 ) Proceeds from exercise of stock options 306 325 Debt refinancing costs — ( 1,132 ) Repurchase of common shares ( 426 ) ( 778 ) Other financing activities 60 60 Net cash flows provided by (used in) financing activities ( 96,604 ) 86,016 Effect of exchange rate changes on cash ( 150 ) 53 Net increase in cash and cash equivalents 6,549 1,638 Cash and cash equivalents: Beginning of period 12,397 7,507 End of period $ 18,946 $ 9,145 ​ The accompanying notes are an integral part of these consolidated financial statements. 5 Table of Contents MYR GROUP INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS 1. Organization, Business and Basis of Presentation Organization and Business 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: The L. E. 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; E.S. 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 performs construction services in two business segments: Transmission and Distribution (“T&D”), and Commercial and Industrial (“C&I”). 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. 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. Since March of 2020, the COVID-19 pandemic has had a significant impact on the global economy, including the US and Canadian economies. As the situation continues to evolve, the Company is closely monitoring the impact of the COVID-19 pandemic on all aspects of our business, including how it impacts our customers, subcontractors, suppliers, vendors and employees. The COVID-19 pandemic caused a slowdown of certain projects due to specific state, local, municipal and customer mandated stay-at-home orders and new project requirements that were established to protect construction workers and the general public, most of which have impacted our C&I segment. 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. The Company is unable to predict the ultimate impact that COVID-19 will have on our business, employees, liquidity, financial condition, results of operations and cash flows. Most of the Company’s operations are considered critical and essential businesses, making our projects generally exempt from stay-at-home or similar orders in certain parts of the United States and western Canada. However, if this pandemic persists for an extended timeframe our business could be more significantly impacted as a result of prolonged unfavorable economic conditions. The Company began implementing changes in March of 2020 in an effort to protect our employees and customers and to support appropriate health and safety protocols, including implementing alternative and flexible work arrangements where possible. As the conditions surrounding the ongoing COVID-19 pandemic remain fluid, and if disruptions do re-emerge, they could materially adversely impact our business. The key estimates that could potentially be impacted include estimates of costs to complete contracts, the recoverability of goodwill and intangibles and allowance for doubtful accounts. 6 Table of Contents Basis of Presentation Interim Consolidated Financial Information The accompanying unaudited consolidated financial statements of the Company were prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial reporting pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC. The Company believes that the disclosures made are adequate to make the information presented not misleading. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary to fairly state the financial position, results of operations, comprehensive income, stockholders’ equity and cash flows with respect to the interim consolidated financial statements, have been included. Certain reclassifications were made to prior year amounts to conform to the current year presentation. The consolidated balance sheet as of December 31, 2019 has been derived from the audited financial statements as of that date. 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, 2019, included in the Company’s Annual Report on Form 10-K, which was filed with the SEC on March 4, 2020 (the "2019 Annual Report"). Foreign Currency The functional currency for the Company’s Canadian operations is the Canadian dollar. Assets and liabilities denominated in Canadian dollars are translated into U.S. dollars at the end-of-period exchange rate. Revenues and expenses are translated using average exchange rates for the periods reported. Equity accounts are translated at historical rates. Cumulative translation adjustments are included as a separate component of accumulated other comprehensive income in shareholders’ equity. Foreign currency transaction gains and losses, arising primarily from changes in exchange rates on short-term monetary assets and liabilities, and ineffective long-term monetary assets and liabilities are recorded in the “other income, net” line on the consolidated statements of operations. Foreign currency gains, recorded in other income, net, for the nine months ended September 30, 2020 were no t significant. Foreign currency gains, recorded in other income, net, for the nine months ended September 30, 2019 were $ 0.1 million. Effective foreign currency transaction gains and losses, arising primarily from long-term monetary assets and liabilities, are recorded in the foreign currency translation adjustment line on the consolidated statements of comprehensive income. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the period reported. 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 Company estimates a cost accrual every quarter that represents costs incurred but not invoiced for services performed or goods delivered during the period, and estimates revenue from the contract cost portion of these accruals based on current gross margin rates to be consistent with its cost method of revenue recognition. As of September 30, 2020 and 2019, the Company had recognized revenues of $ 19.1 million and $ 31.1 million, respectively, related to significant change orders and/or claims that had been included as contract price adjustments on certain contracts, some of which are multi-year projects. These change orders and/or claims are in the process of being negotiated in the normal course of business, and a portion of these recognized revenues had been included in multiple periods. The cost-to-cost method of accounting requires the Company to make estimates about the expected revenue and gross profit on each of its contracts in process. During the three months ended September 30, 2020, changes in estimates pertaining to certain projects decreased consolidated gross margin by 0.3 %, which resulted in decreases in operating income of $ 1.9 million, net income attributable to MYR Group Inc. of $ 1.5 million and diluted earnings per common share attributable to MYR Group Inc. 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 attributable to MYR Group Inc. of $ 5.5 million and diluted earnings per common share attributable to MYR Group Inc. of $ 0.33 . 7 Table of Contents During the three months ended September 30, 2019, changes in estimates pertaining to certain projects increased consolidated gross margin by 0.2 %, which resulted in increases in operating income of $ 0.9 million, net income attributable to MYR Group Inc. of $ 0.8 million and diluted earnings per common share attributable to MYR Group Inc. of $ 0.05 . During the nine months ended September 30, 2019, changes in estimates pertaining to certain projects decreased consolidated gross margin by 0.5 %, which resulted in decreases in operating income of $ 7.8 million, net income attributable to MYR Group Inc. of $ 3.3 million and diluted earnings per common share attributable to MYR Group Inc. of $ 0.20 . Recent Accounting Pronouncements Changes to U.S. GAAP are typically established by the Financial Accounting Standards Board (“FASB”) in the form of accounting standards updates (“ASUs”) to the FASB’s Accounting Standards Codification (“ASC”). The Company considers the applicability and impact of all ASUs. 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 June 2016, the FASB issued ASU 2016-13 , Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments , which introduced an expected credit loss methodology for the measurement and recognition of credit losses on most financial instruments, including trade receivables and off-balance sheet credit exposures. Under this guidance, an entity is required to consider a broader range of information to estimate expected credit losses, which may result in earlier recognition of losses. This ASU also requires disclosure of information regarding how a company developed its allowance, including changes in the factors that influenced management’s estimate of expected credit losses and the reasons for those changes. On January 1, 2020, the Company adopted this ASU resulting in a $ 0.3 million cumulative-effect adjustment to retained earnings associated with the increase in the Company’s allowance for doubtful accounts. Additionally, in connection with the adoption of this ASU the Company adjusted its presentation for allowance for doubtful accounts associated with unbilled revenue, which represents a portion of the Company’s contract assets, and were previously classified as accounts receivable net of allowances. Total allowance for doubtful accounts associated with contract assets as of September 30, 2020 and at the time of adopting this ASU were $ 0.5 million and $ 0.4 million, respectively. The Company’s consolidated balance sheet as of December 31, 2019 and consolidated statements of cash flows for the year ended December 31, 2019 have not been adjusted for this change in treatment of allowance for doubtful accounts associated with unbilled revenue. See Note 3–Contract Assets and Liabilities for further information related to the Company’s contract assets. In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment , which simplifies the subsequent measurement of goodwill, through the elimination of Step 2 from the goodwill impairment test. Instead, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. The Company adopted this ASU on a prospective basis in January 2020 and there was no effect on the Company’s consolidated financial statements. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement , which modifies the disclosure requirements for Level 1, Level 2 and Level 3 instruments in the fair value hierarchy. The Company adopted this ASU in January 2020 and there was no effect on the consolidated financial statements or disclosures. Recently Issued Accounting Pronouncements In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes , which simplifies the accounting for income taxes, eliminates certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects of the current guidance to promote consistent application among reporting entities. The guidance is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years, with early adoption permitted. Upon adoption, the Company must apply certain aspects of this standard retrospectively for all periods presented while other aspects are applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. The Company does not expect that this pronouncement will have a significant impact on its financial statements. 8 Table of Contents 2. Acquisition CSI Electrical Contractors, Inc. On July 15, 2019, the Company completed the acquisition of substantially all the assets of CSI Electrical Contractors, Inc. (“CSI”), an electrical contracting firm based in California. CSI provides services to a broad array of end markets under the Company’s C&I segment. The total consideration, after net asset adjustments of approximately $ 1.0 million, was $ 80.7 million, which was funded through borrowings under the Company’s credit facility. The Company finalized the purchase price accounting relating to the acquisition of CSI in 2019. The purchase agreement also includes contingent consideration provisions for margin guarantee adjustments based upon contract performance subsequent to the acquisition. The contracts were valued at fair value at the acquisition date, causing no margin guarantee estimate or adjustments for fair value. Changes in contract estimates, such as modified costs to complete or change order recognition, will result in changes to these margin guarantee estimates. Changes in contingent consideration, subsequent to the acquisition, related to the margin guarantee adjustments on contracts of approximately $ 0.6 million, all of which occurred prior to June 30, 2020 were recorded in other expense for the nine months ended September 30, 2020. Future margin guarantee adjustments, if any, are expected to be recognized through 2020. The Company could also be required to make compensation payments contingent on the successful achievement of certain performance targets and continued employment of certain key executives of CSI. These payments are recognized as compensation expense on the Company’s consolidated statements of operations as incurred. For the three and nine months ended September 30, 2020, the Company recognized $ 1.4 million and $ 2.5 million, respectively, of compensation expense associated with these contingent payments. 3. Contract Assets and Liabilities Contracts with customers usually stipulate the timing of payment, which is defined by the terms found within the various contracts under which work was performed during the period. 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 contain unbilled revenue and contract retainages associated with contract work that has been completed and billed but not paid by customers, pursuant to retainage provisions, that are generally due once the job is completed and approved. The allowance for doubtful accounts associated with contract assets was $ 0.5 million as of September 30, 2020 and $ 0.1 million as of December 31, 2019. Contract assets consisted of the following: (in thousands) September 30, 2020 December 31, 2019 Change ​ ​ ​ ​ Unbilled revenue, net $ 128,785 $ 126,087 $ 2,698 Contract retainages, net 92,806 91,022 1,784 Contract assets, net $ 221,591 $ 217,109 $ 4,482 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: (in thousands) September 30, 2020 December 31, 2019 Change ​ ​ ​ ​ Deferred revenue $ 123,301 $ 102,673 $ 20,628 Accrued loss provision 2,310 2,813 ( 503 ) Contract liabilities $ 125,611 $ 105,486 $ 20,125 9 Table of Contents The following table provides information about contract assets and contract liabilities from contracts with customers: (in thousands) September 30, 2020 December 31, 2019 Change ​ ​ ​ ​ Contract assets, net $ 221,591 $ 217,109 $ 4,482 Contract liabilities ( 125,611 ) ( 105,486 ) ( 20,125 ) Net contract assets (liabilities) $ 95,980 $ 111,623 $ ( 15,643 ) The difference between the opening and closing balances of the Company’s contract assets and contract liabilities primarily results from the timing of the Company’s billings in relation to its performance of work. The amounts of revenue recognized in the period that were included in the opening contract liability balances were $ 31.3 million and $ 57.7 million for the three and nine months ended September 30, 2020, respectively. The amounts of revenue recognized in the period that were included in the opening contract liability balances were $ 11.9 million and $ 39.4 million for the three and nine months ended September 30, 2019, respectively. This revenue consists primarily of work performed on previous billings to customers. The net asset position for contracts in process consisted of the following: (in thousands) September 30, 2020 December 31, 2019 ​ ​ ​ Costs and estimated earnings on uncompleted contracts $ 3,710,876 $ 3,532,886 Less: billings to date 3,705,392 3,509,472 $ 5,484 $ 23,414 The net asset position for contracts in process is included within the contract asset and contract liability in the accompanying consolidated balance sheets as follows: (in thousands) September 30, 2020 December 31, 2019 ​ Unbilled revenue $ 128,785 $ 126,087 Deferred revenue ( 123,301 ) ( 102,673 ) $ 5,484 $ 23,414 4. Lease Obligations From time-to-time, the Company enters into non-cancelable leases for some of our facility, vehicle and equipment needs. These leases allow the Company to conserve cash by paying a monthly lease rental fee for the use of facilities, vehicles and equipment rather than purchasing them. The Company’s leases have remaining terms ranging from one to six years , some of which may include options to extend the leases for up to five years , and some of which may include options to terminate the leases within one year . Currently, all the Company’s leases contain fixed payment terms. The Company may decide to cancel or terminate a lease before the end of its term, in which case we are typically liable to the lessor for the remaining lease payments under the term of the lease. Additionally, all of the Company's month-to-month leases are cancelable, by the Company or the lessor, at any time and are not included in our right-of-use asset or liability. At September 30, 2020, the Company had several leases with residual value guarantees, due to the acquisition of CSI. Typically, the Company has purchase options on the equipment underlying its long-term leases and many of its short-term rental arrangements. The Company may exercise some of these purchase options when the need for equipment is on-going and the purchase option price is attractive. Leases are accounted for as operating or finance leases, depending on the terms of the lease. 10 Table of Contents The following is a summary of the lease-related assets and liabilities recorded: ​ September 30, 2020 December 31, 2019 (in thousands) Classification on the Consolidated Balance Sheet Assets Operating lease right-of-use assets Operating lease right-of-use assets $ 22,620 $ 22,958 Finance lease right-of-use assets Property and equipment, net of accumulated depreciation 664 1,478 Total right-of-use lease assets $ 23,284 $ 24,436 ​ Liabilities Current Operating lease obligations Current portion of operating lease obligations $ 6,468 $ 6,205 Finance lease obligations Current portion of finance lease obligations 607 1,135 Total current obligations 7,075 7,340 Non-current Operating lease obligations Operating lease obligations, net of current maturities 16,230 16,884 Finance lease obligations Finance lease obligations, net of current maturities — 338 Total non-current obligations 16,230 17,222 Total lease obligations $ 23,305 $ 24,562 The following is a summary of the lease terms and discount rates: ​ September 30, 2020 December 31, 2019 Weighted-average remaining lease term - finance leases 0.6 years 1.4 years Weighted-average remaining lease term - operating leases 3.5 years 3.9 years Weighted-average discount rate - finance leases 2.5 % 2.5 % Weighted-average discount rate - operating leases 3.9 % 3.8 % The following is a summary of certain information related to the lease costs for finance and operating leases: (in thousands) Three months ended September 30, Nine months ended September 30, ​ 2020 2019 2020 2019 Lease cost: ​ ​ Finance lease cost: ​ ​ Amortization of right-of-use assets $ 240 $ 273 $ 737 $ 820 Interest on lease liabilities 7 16 27 53 Operating lease cost 2,327 2,055 6,875 5,016 Short-term lease cost — — — 8 Variable lease costs 106 67 259 198 Total lease cost $ 2,680 $ 2,411 $ 7,898 $ 6,095 11 Table of Contents The following is a summary of other information and supplemental cash flow information related to finance and operating leases: ​ Nine months ended September 30, (in thousands) 2020 2019 Other information: Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 6,676 $ 5,064 Right-of-use asset obtained in exchange for new operating lease obligations $ 5,592 $ 11,374 The future undiscounted minimum lease payments, as reconciled to the discounted minimum lease obligation indicated on the Company’s consolidated balance sheets, under financial leases, less interest, and under operating leases, less imputed interest, as of September 30, 2020 were as follows: (in thousands) Finance Lease Obligations Operating Lease Obligations Total Lease Obligations ​ ​ ​ ​ Remainder of 2020 $ 289 $ 2,394 $ 2,683 2021 326 8,449 8,775 2022 — 6,988 6,988 2023 — 5,048 5,048 2024 — 2,491 2,491 2025 — 976 976 Thereafter — 795 795 Total minimum lease payments 615 27,141 27,756 Financing component ( 8 ) ( 4,443 ) ( 4,451 ) Net present value of minimum lease payments 607 22,698 23,305 Less: current portion of finance and operating lease obligations ( 607 ) ( 6,468 ) ( 7,075 ) Long-term finance and operating lease obligations $ — $ 16,230 $ 16,230 The financing component for finance lease obligations represents the interest component of finance leases that will be recognized as interest expense in future periods. The financing component for operating lease obligations represents the effect of discounting the lease payments to their present value. 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, 2020, the minimum lease payments required under these leases totaled $ 3.6 million, which are due over the next 3.8 years. 5. Fair Value Measurements The Company uses the three-tier hierarchy of fair value measurement, which prioritizes the inputs used in measuring fair value based upon their degree of availability in external active markets. These tiers include: Level 1 (the highest priority), defined as observable inputs, such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; 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. 12 Table of Contents As of September 30, 2020 and December 31, 2019, the Company determined that the carrying value of cash and cash equivalents approximated fair value based on Level 1 inputs. As of September 30, 2020, the fair values of the Company’s long-term debt and finance lease obligations were based on Level 2 inputs. As of December 31, 2019, the fair values of the Company's long-term debt and finance lease obligations were based on Level 2 inputs. The Company’s long-term debt was based on variable and fixed interest rates at September 30, 2020 and December 31, 2019, for new issues with similar remaining maturities, and approximated carrying value. 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. 6. Debt The table below reflects the Company’s total debt, including borrowings under its credit agreement and master loan agreements for equipment notes:​ (dollar amounts in thousands) Inception Date Stated Interest Rate (per annum) Payment Frequency Term (years) Outstanding Balance as of September 30, 2020 Outstanding Balance as of December 31, 2019 ​ ​ ​ ​ ​ ​ ​ Credit Agreement Revolving loans 9/13/2019 Variable Variable 5 $ 38,630 $ 103,820 ​ Equipment Notes Equipment Note 1 9/28/2018 4.16 % Semi-annual 5 — 10,643 Equipment Note 2 9/28/2018 4.23 % Semi-annual 7 — 11,200 Equipment Note 3 12/31/2018 3.97 % Semi-annual 5 — 1,953 Equipment Note 4 12/31/2018 4.02 % Semi-annual 7 — 2,108 Equipment Note 5 12/31/2018 4.01 % Semi-annual 7 — 1,751 Equipment Note 6 6/25/2019 2.89 % Semi-annual 7 13,596 14,286 Equipment Note 7 6/24/2019 3.09 % Semi-annual 5 7,675 9,033 Equipment Note 8 12/27/2019 2.75 % Semi-annual 5 6,008 6,496 Equipment Note 9 12/24/2019 3.01 % Semi-annual 7 4,285 4,534 ​ 31,564 62,004 Total debt 70,194 165,824 Less: current portion of long-term debt ( 4,318 ) ( 8,737 ) Long-term debt $ 65,876 $ 157,087 Credit Agreement On September 13, 2019, the Company entered into a five-year amended and restated credit agreement (the “Credit Agreement”) with a syndicate of banks led by JPMorgan Chase Bank, N.A. and Bank of America, N.A, that provides for a $ 375 million facility (the “Facility”), not to exceed three times Consolidated EBITDA (as defined in the Credit Agreement) less Consolidated Total Indebtedness (as defined in the Credit Agreement), which can be used for revolving loans and up to $ 150 million may be used for letters of credit. The Facility also allows for revolving loans and letters of credit in Canadian dollars and other currencies, up to the U.S. dollar equivalent of $ 75 million. The Company has an expansion option to increase the commitments under the Facility or enter into incremental term loans, subject to certain conditions, by up to an additional $ 200 million upon receipt of additional commitments from new or existing lenders. Subject to certain exceptions, the Facility is secured by substantially all of the assets of the Company and its domestic subsidiaries, and by a pledge of substantially all of the capital stock of the Company’s domestic subsidiaries and 65 % of the capital stock of the direct foreign subsidiaries of the Company. Additionally, subject to certain exceptions, the Company’s domestic subsidiaries also guarantee the repayment of all amounts due under the Credit Agreement. If an event of default occurs and is continuing, on the terms and subject to the conditions set forth in the Credit Agreement, amounts outstanding under the Facility may be accelerated and may become or be declared immediately due and payable. Borrowings under the Credit Agreement are used for refinancing existing indebtedness, working capital, capital expenditures, acquisitions, share repurchases, and other general corporate purposes. 13 Table of Contents Amounts borrowed under the Credit Agreement bear interest, at the Company’s option, at a rate equal to either (1) the Alternate Base Rate (as defined in the Credit Agreement), plus an applicable margin ranging from 0.00 % to 0.75 %; or (2) Adjusted LIBO Rate (as defined in the Credit Agreement) plus an applicable margin ranging from 1.00 % to 1.75 %. The applicable margin is determined based on the Company’s consolidated leverage ratio (the “Leverage Ratio”) which is defined in the Credit Agreement as Consolidated Total Indebtedness (as defined in the Credit Agreement) divided by Consolidated EBITDA (as defined in the Credit Agreement). Letters of credit issued under the Facility are subject to a letter of credit fee of 1.00 % to 1.75 % for non-performance letters of credit or 0.50 % to 0.875 % for performance letters of credit, based on the Company’s consolidated Leverage Ratio. The Company is subject to a commitment fee of 0.15 % to 0.25 %, based on the Company’s consolidated Leverage Ratio, on any unused portion of the Facility. The Credit Agreement restricts certain types of payments when the Company’s consolidated Leverage Ratio exceeds 2.50 or the Company's consolidated Liquidity (as defined in the Credit Agreement) is less than $ 50 million. The weighted average interest rate on borrowings outstanding on the Facility for the nine months ended September 30, 2020 was 2.36 % per annum. Under the Credit Agreement, the Company is subject to certain financial covenants and must maintain a maximum consolidated Leverage Ratio of 3.0 and a minimum interest coverage ratio of 3.0 , which is defined in the Credit Agreement as Consolidated EBITDA (as defined in the Credit Agreement) divided by interest expense (as defined in the Credit Agreement). The Credit Agreement also contains covenants including limitations on asset sales, investments, indebtedness and liens. The Company was in compliance with all of its financial covenants under the Credit Agreement as of September 30, 2020. As of September 30, 2020, the Company had letters of credit outstanding under the Facility of approximately $ 11.3 million, including $ 10.7 million related to the Company's payment obligation under its insurance programs and approximately $ 0.6 million related to contract performance obligations. As of December 31, 2019, the Company had letters of credit outstanding under the Facility of approximately $ 10.6 million, including $ 10.0 million related to the Company's payment obligation under its insurance programs and approximately $ 0.6 million related to contract performance obligations. The Company had remaining deferred debt issuance costs totaling $ 1.2 million as of September 30, 2020, related to the line of credit. As permitted under ASU No. 2015-15, debt issuance costs have been deferred and are presented as an asset within other assets, which is amortized as interest expense over the term of the line of credit. Equipment Notes 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. 14 Table of Contents As of September 30, 2020, the Company had four Equipment Notes outstanding under the Master Loan Agreements that are collateralized by equipment and vehicles owned by the Company. The following table sets forth our remaining principal payments for the Company’s outstanding Equipment Notes as of September 30, 2020: (in thousands) Future Equipment Notes Principal Payments ​ ​ Remainder of 2020 $ 2,143 2021 4,381 2022 4,511 2023 4,645 2024 7,103 2025 2,189 Thereafter 6,592 Total future principal payments $ 31,564 Less: current portion of equipment notes ( 4,318 ) Long-term principal obligations $ 27,246 7. Revenue Recognition Disaggregation of Revenue A majority of the Company’s revenues are earned through contracts with customers that normally provide for payment upon completion of specified work or units of work as identified in the contract. Although there is considerable variation in the terms of these contracts, they are primarily structured as fixed-price contracts, under which the Company agrees to do the entire project for a fixed amount, or unit-price contracts, under which the Company agrees to do the work at a fixed price per unit of work as specified in the contract. The Company also enters into time-and-equipment and time-and-materials contracts under which the Company is paid for labor and equipment at negotiated hourly billing rates and for other expenses, including materials, as incurred at rates agreed to in the contract. Finally, the Company sometimes enters into cost-plus contracts, where the Company is paid for costs plus a negotiated margin. On occasion, time-and-equipment, time-and-materials and cost-plus contracts include a guaranteed not-to-exceed maximum price. Historically, fixed-price and unit-price contracts have had the highest potential margins; however, they have had a greater risk in terms of profitability because cost overruns may not be recoverable. Time-and-equipment, time-and-materials and cost-plus contracts have historically had less margin upside, but generally have had a lower risk of cost overruns. The Company also provides services under master service agreements (“MSAs”) and other variable-term service agreements. MSAs normally cover maintenance, upgrade and extension services, as well as new construction. Work performed under MSAs is typically billed on a unit-price, time-and-materials or time-and-equipment basis. MSAs are typically one to three years in duration; however, most of the Company’s contracts, including MSAs, may be terminated by the customer on short notice, typically 30 to 90 days, even if the Company is not in default under the contract. Under MSAs, customers generally agree to use the Company for certain services in a specified geographic region. Most MSAs include no obligation for the contract counterparty to assign specific volumes of work to the Company and do not require the counterparty to use the Company exclusively, although in some cases the MSA contract gives the Company a right of first refusal for certain work. Additional information related to the Company’s market types is provided in Note 11–Segment Information. 15 Table of Contents The components of the Company’s revenue by contract type for the three and nine months ended September 30, 2020 and 2019 were as follows: ​ Three months ended September 30, 2020 ​ T&D C&I Total (dollars in thousands) Amount Percent Amount Percent Amount Percent Fixed price $ 126,387 42.2 % $ 248,596 80.7 % $ 374,983 61.7 % Unit price 88,579 29.6 22,589 7.3 111,168 18.3 T&E 79,714 26.6 24,322 7.9 104,036 17.1 Other 5,059 1.6 12,655 4.1 17,714 2.9 ​ $ 299,739 100.0 % $ 308,162 100.0 % $ 607,901 100.0 % ​ Three months ended September 30, 2019 ​ T&D C&I Total (dollars in thousands) Amount Percent Amount Percent Amount Percent Fixed price $ 157,357 53.4 % $ 220,872 76.6 % $ 378,229 64.9 % Unit price 49,392 16.7 19,518 6.8 68,910 11.8 T&E 84,299 28.6 32,868 11.4 117,167 20.1 Other 3,892 1.3 15,016 5.2 18,908 3.2 ​ $ 294,940 100.0 % $ 288,274 100.0 % $ 583,214 100.0 % The components of the Company’s revenue by contract type for the nine months ended September 30, 2020 and 2019 were as follows: ​ Nine months ended September 30, 2020 ​ T&D C&I Total (dollars in thousands) Amount Percent Amount Percent Amount Percent Fixed price $ 373,739 44.7 % $ 654,797 81.5 % $ 1,028,536 62.7 % Unit price 236,518 28.3 59,712 7.4 296,230 18.1 T&E 209,397 25.1 61,876 7.7 271,273 16.6 Other 16,114 1.9 27,269 3.4 43,383 2.6 ​ $ 835,768 100.0 % $ 803,654 100.0 % $ 1,639,422 100.0 % ​ Nine months ended September 30, 2019 ​ T&D C&I Total (dollars in thousands) Amount Percent Amount Percent Amount Percent Fixed price $ 410,253 49.8 % $ 469,700 69.4 % $ 879,953 58.7 % Unit price 152,748 18.6 42,361 6.3 195,109 13.0 T&E 237,448 28.8 82,592 12.2 320,040 21.3 Other 22,949 2.8 82,033 12.1 104,982 7.0 ​ $ 823,398 100.0 % $ 676,686 100.0 % $ 1,500,084 100.0 % The components of the Company’s revenue by market type for the three months ended September 30, 2020 and 2019 were as follows: ​ Three months ended September 30, 2020 Three months ended September 30, 2019 (dollars in thousands) Amount Percent Segment Amount Percent Segment Transmission $ 185,007 30.4 % T&D $ 196,083 33.6 % T&D Distribution 114,732 18.9 T&D 98,857 17.0 T&D Electrical construction 308,162 50.7 C&I 288,274 49.4 C&I Total revenue $ 607,901 100.0 % $ 583,214 100.0 % 16 Table of Contents The components of the Company’s revenue by market type for the nine months ended September 30, 2020 and 2019 were as follows: ​ Nine months ended September 30, 2020 Nine months ended September 30, 2019 (dollars in thousands) Amount Percent Segment Amount Percent Segment Transmission $ 537,762 32.8 % T&D $ 553,314 36.9 % T&D Distribution 298,006 18.2 T&D 270,084 18.0 T&D Electrical construction 803,654 49.0 C&I 676,686 45.1 C&I Total revenue $ 1,639,422 100.0 % $ 1,500,084 100.0 % Remaining Performance Obligations As of September 30, 2020, the Company had $ 1.60 billion of remaining performance obligations. The Company’s remaining performance obligations include projects that have a written award, a letter of intent, a notice to proceed or an agreed upon work order to perform work on mutually accepted terms and conditions. The following table summarizes the amount of remaining performance obligations as of September 30, 2020 that the Company expects to be realized and the amount of the remaining performance obligations that the Company reasonably estimates will not be recognized within the next twelve months. ​ Remaining Performance Obligations at September 30, 2020 ​ (in thousands) Total Amount estimated to not be recognized within 12 months Total at December 31, 2019 ​ ​ ​ ​ T&D $ 639,171 $ 207,175 $ 381,850 C&I 965,589 185,027 1,027,193 Total $ 1,604,760 $ 392,202 $ 1,409,043 The Company expects a vast majority of the remaining performance obligations to be recognized within twenty-four months, although the timing of the Company’s performance is not always under its control. Additionally, the difference between the remaining performance obligations and backlog is due to the exclusion of a portion of the Company’s MSAs under certain contract types from the Company’s remaining performance obligations as these contracts can be canceled for convenience at any time by the Company or the customer without considerable cost incurred by the customer. Additional information related to backlog is provided in Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” 8. Income Taxes The U.S. federal statutory tax rate was 21 % for each of the three and nine months ended September 30, 2020 and 2019. The Company’s effective tax rate for the three and nine months ended September 30, 2020 was 27.4 % and 27.7 %, respectively, of pretax income compared to the effective tax rate for the three and nine months ended September 30, 2019 of 26.4 % and 27.2 %, respectively. The difference between the U.S. federal statutory tax rate and the Company’s effective tax rate for the three and nine months ended September 30, 2020 was primarily due to state income taxes and foreign earnings and the associated impact of the global intangible low tax income (“GILTI”) and other permanent difference items. The difference between the U.S. federal statutory tax rate and the Company’s effective tax rate for the three and nine months ended September 30, 2019, was primarily due to state income taxes offset by the impact of the Company’s noncontrolling interest. The Company had unrecognized tax benefits of approximately $ 0.4 million and $ 0.2 million as of September 30, 2020 and December 31, 2019, which were included in other liabilities in the accompanying consolidated balance sheets. The Company’s policy is to recognize interest and penalties related to income tax liabilities as a component of income tax expense in the consolidated statements of operations. The amount of interest and penalties charged to income tax expense related to unrecognized tax benefits was no t significant for the three and nine months ended September 30, 2020 and 2019. 17 Table of Contents The Company is subject to taxation in various jurisdictions. The Company’s 2017 through 2019 tax returns are subject to examination by U.S. federal authorities. The Company’s tax returns are subject to examination by various state authorities for the years 2016 through 2019. 9. Commitments and Contingencies Purchase Commitments As of September 30, 2020, the Company had approximately $ 3.0 million in outstanding purchase orders for certain construction equipment, with cash payments scheduled to occur over the next three months . Insurance and Claims Accruals The Company carries insurance policies, which are subject to certain deductibles, 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’s health benefit plans are subject to stop-loss limits of up to $ 0.2 million for qualified individuals. Losses up to the deductible and stop-loss amounts are accrued based upon the Company’s estimates of the ultimate liability for claims reported and an estimate of claims incurred but not yet reported. The insurance and claims accruals are based on known facts, actuarial estimates and historical trends. While recorded accruals are based on the ultimate liability, which includes amounts in excess of the deductible, a corresponding receivable for amounts in excess of the deductible is included in current and long-term assets in the consolidated balance sheets. Performance and Payment Bonds and Parent Guarantees In certain circumstances, the Company is required to provide performance and payment bonds in connection with its future performance on certain contractual commitments. The Company has indemnified its sureties for any expenses paid out under these bonds. As of September 30, 2020, an aggregate of approximately $ 1.36 billion in original face amount of bonds issued by the Company’s sureties were outstanding. The Company estimated the remaining cost to complete these bonded projects was approximately $ 660.2 million as of September 30, 2020. 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. Additionally, from time to time the Company is required to post letters of credit to guarantee the obligations of wholly owned subsidiaries, which reduces the borrowing availability under the Facility. Indemnities 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. These indemnification obligations may subject the Company to indemnity claims and liabilities and related litigation. The Company is not aware of any material unrecorded liabilities for asserted claims in connection with these indemnification obligations. Collective Bargaining Agreements Many of the Company’s subsidiaries’ craft labor employees are covered by collective bargaining agreements. The agreements require the subsidiaries to pay specified wages, provide certain benefits and contribute certain amounts to multi-employer pension plans. 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. 18 Table of Contents Litigation and Other Legal Matters The Company is from time-to-time party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of business. These actions typically seek, among other things, compensation for alleged personal injury, breach of contract, property damages, punitive damages, civil penalties or other losses, or injunctive or declaratory relief. The Company is routinely subject to other civil claims, litigation and arbitration, and regulatory investigations arising in the ordinary course of our business, as well as in respect of our divested businesses. These claims, lawsuits and other proceedings include claims related to the Company’s current services and operations, as well as our historic operations. 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 operations or cash flows. 10. Stock-Based Compensation The Company maintains two equity compensation plans under which stock-based compensation has been granted: the 2017 Long-Term Incentive Plan (which was amended and restated as of April 23, 2020) (the “LTIP”) and the 2007 Long-Term Incentive Plan (the “2007 Plan”). Upon the adoption of the original LTIP in 2017, awards were no longer granted under the 2007 Plan. The LTIP provides for grants of (a) incentive stock options qualified as such under U.S. federal income tax laws, (b) stock options that do not qualify as incentive stock options, (c) stock appreciation rights, (d) restricted stock awards, (e) restricted stock units, (f) performance share awards, (g) phantom stock units, (h) stock bonuses, (i) dividend equivalents, and (j) any combination of such grants. Ordinarily the number of restricted stock awards and ROIC-based performance share awards are determined by dividing the amount of the equity compensation award allocated to each award type, by the closing price of the Company’s common stock on the date of the grant. However, as a result of the negative impact of the COVID-19 pandemic on the Company’s stock price during late March and early April of 2020, the Company’s compensation committee elected to utilize the Company's average closing stock price during the last 30 trading days of 2019 to determine the number of restricted stock and ROIC-based performance shares granted in 2020. The use of this 30 -trading day average resulted in the utilization of an average stock price of $ 33.57 , instead of the grant date closing stock price of $ 26.75 . The Company has outstanding grants of time-vested stock awards in the form of restricted stock awards and restricted stock units. During the nine months ended September 30, 2020, the Company granted 104,857 shares of time-vested stock awards under the LTIP to employees and to our non-employee directors at a weighted average grant date fair value of $ 26.75 . These time-vested stock awards granted to non-employee directors vest over one year , time-vested stock awards granted to employees vest ratably on April 27, 2021, March 23, 2022 and March 23, 2023. During the nine months ended September 30, 2020, 77,397 shares of time-vested stock awards vested at a weighted average grant date fair value of $ 34.31 . During the nine months ended September 30, 2020, the Company granted 79,788 performance share awards under the LTIP at target, which cliff vest on December 31, 2022, at a weighted average grant date fair value of $ 34.10 . The number of shares ultimately earned under a performance award may vary from zero to 200 % of the target shares granted, based upon the Company’s performance compared to certain metrics. The metrics used were determined at the time of the grant by the Compensation Committee of the Board of Directors and were either based on internal measures, such as the Company’s financial performance compared to targets, or on a market-based metric, such as the Company’s stock performance compared to a peer group. Performance awards granted cliff vest upon attainment of the stated performance targets and minimum service requirements and are paid in shares of the Company’s common stock. During the nine months ended September 30, 2020, plan participants exercised options to purchase 14,980 shares of the Company’s common stock with a weighted average exercise price of $ 20.42 . The Company recognizes stock-based compensation expense related to restricted stock awards and restricted stock units based on the grant date fair value, which was the closing price of the Company’s stock on the date of grant. The fair value is expensed over the service period, which is generally three years . 19 Table of Contents For performance awards, the Company recognizes stock-based compensation expense based on the grant date fair value of the award. The fair value of internal metric-based performance awards is determined by the closing stock price of the Company’s common stock on the date of the grant. The fair value of market-based performance awards is computed using a Monte Carlo simulation. Performance awards are expensed over the service period of approximately 2.8 years, and the Company adjusts the stock-based compensation expense related to internal metric-based performance awards according to its determination of the shares expected to vest at each reporting date. 11. 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. The Company has two reporting segments, each a separate operating segment, which are referred to as T&D and C&I. Performance measurement and resource allocation for the reporting segments are based on many factors. The primary financial measures used to evaluate the segment information are contract revenues and income from operations, excluding general corporate expenses. General corporate expenses include corporate facility and staffing costs, which include safety costs, professional fees, IT expenses and management fees. The accounting policies of the segments are the same as those described in the Note 1– Organization, Business and Significant Accounting Policies to the 2019 Annual Report. Transmission and Distribution: The T&D segment provides a broad range of services on electric transmission and distribution networks and substation facilities which include design, engineering, procurement, construction, upgrade, maintenance and repair services with a particular focus on construction, maintenance and repair. T&D services include the construction and maintenance of high voltage transmission lines, substations and lower voltage underground and overhead distribution systems. The T&D segment also provides emergency restoration services in response to hurricane, ice or other storm-related damage. 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. 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 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. The C&I segment has a diverse customer base with many long-standing relationships. The information in the following table is derived from the segment’s internal financial reports used for corporate management purposes: ​ Three months ended September 30, Nine months ended September 30, (in thousands) 2020 2019 2020 2019 ​ ​ ​ ​ ​ Contract revenues: T&D $ 299,739 $ 294,940 $ 835,768 $ 823,398 C&I 308,162 288,274 803,654 676,686 ​ $ 607,901 $ 583,214 $ 1,639,422 $ 1,500,084 Income from operations: T&D $ 32,387 $ 17,726 $ 74,189 $ 48,706 C&I 11,732 10,795 30,002 20,365 General Corporate ( 19,190 ) ( 11,259 ) ( 43,512 ) ( 32,773 ) ​ $ 24,929 $ 17,262 $ 60,679 $ 36,298 ​ For the three and nine months ended September 30, 2020, contract revenues attributable to the Company’s Canadian operations were $ 19.6 million and $ 58.6 million, respectively, predominantly in the C&I segment. For the three and nine months ended September 30, 2019, contract revenues attributable to the Company’s Canadian operations were $ 22.3 million and $ 55.8 million, respectively, predominantly in the C&I segment. 20 Table of Contents 12. Noncontrolling Interest On July 2, 2018, through the acquisition of certain assets of the Huen Electric, Inc., Huen Electric New Jersey Inc., and Huen New York, Inc. (collectively, the “Huen Companies”), the Company became the majority controlling interest in a joint venture. As a result, the Company has consolidated the carrying value of the joint ventures’ assets and liabilities and results of operations in the Company’s consolidated financial statements. The 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 acquired joint venture made no distributions to its partners, and the Company made no capital contributions to the joint venture, during the three and nine months ended September 30, 2020. Additionally, there have been no changes in ownership during the three and nine months ended September 30, 2020. The project associated with this joint venture was substantially completed in 2019. 13. Earnings Per Share The Company computes earnings per share attributable to MYR Group Inc. using the treasury stock method. Under the treasury stock method, basic earnings per share attributable to MYR Group Inc. are computed by dividing net income available to stockholders by the weighted average number of common shares outstanding during the period, and diluted earnings per share are computed by dividing net income available to stockholders by the weighted average number of common shares outstanding during the period plus all potentially dilutive common stock equivalents, except in cases where the effect of the common stock equivalent would be anti-dilutive. Net income attributable to MYR Group Inc. and the weighted average number of common shares used to compute basic and diluted earnings per share were as follows:​ ​ Three months ended September 30, Nine months ended September 30, (in thousands, except per share data) 2020 2019 2020 2019 Numerator: Net income attributable to MYR Group Inc. $ 17,292 $ 10,355 $ 40,609 $ 24,915 Denominator: Weighted average common shares outstanding 16,698 16,614 16,670 16,576 Weighted average dilutive securities 184 100 128 116 Weighted average common shares outstanding, diluted 16,882 16,714 16,798 16,692 Income per common share attributable to MYR Group Inc.: Basic $ 1.04 $ 0.62 $ 2.44 $ 1.50 Diluted $ 1.02 $ 0.62 $ 2.42 $ 1.49 ​ For the three and nine months ended September 30, 2020 and 2019, certain common stock equivalents were excluded from the calculation of dilutive securities because their inclusion would either have been anti-dilutive or, for stock options, the exercise prices of those stock options were greater than the average market price of the Company’s common stock for the period. All of the Company’s unvested time-vested stock awards were included in the computation of weighted average dilutive securities. 21 Table of Contents 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:​ ​ Three months ended September 30, Nine months ended September 30, (in thousands) 2020 2019 2020 2019 ​ ​ ​ ​ ​ Performance awards 34 30 34 73 22 Table of Contents