Earnings call transcript: MYR Group Q4 2024 misses EPS, revenue forecasts

MYR Group Inc (NASDAQ:MYRG) reported its fourth-quarter 2024 earnings, revealing a notable underperformance against market expectations. The company posted earnings per share (EPS) of $0.37, significantly below the forecasted $0.70, and reported revenues of $830 million, missing the expected $886.58 million. Following the earnings release, MYR Group’s stock saw a decline of 1.83% in after-hours trading, closing at $125.88. According to InvestingPro data, three analysts have recently revised their earnings estimates downward for the upcoming period, and the stock is currently trading at a relatively high P/E ratio of 52.5x.

Key Takeaways

• MYR Group’s Q4 2024 revenue decreased by 17% year-over-year.
• EPS fell short of forecasts by nearly 47%.
• Gross margin improved to 10.4% from 9.7% year-over-year.
• The stock dropped by 1.83% following the earnings release.

Company Performance

MYR Group faced a challenging Q4 2024, with revenues falling 17% compared to the same period last year. The net income dropped to $16 million from $24 million a year earlier. Despite the setbacks in revenue and earnings, the company managed to improve its gross margin to 10.4%, up from 9.7% year-over-year, indicating some operational efficiencies. InvestingPro analysis reveals the company operates with a moderate debt level, maintaining a healthy debt-to-equity ratio of 0.23 and a current ratio of 1.35, suggesting stable financial health despite current challenges.

Financial Highlights

• Revenue: $830 million, a 17% decrease year-over-year.
• Earnings per share: $0.99, down from $1.43 the previous year.
• Gross Margin: 10.4%, an increase from 9.7% year-over-year.
• Total (EPA:TTEF) Backlog: $2.6 billion, a 2.5% increase from the prior year.

Earnings vs. Forecast

MYR Group’s actual EPS of $0.37 was well below the forecasted $0.70, reflecting a 47% miss. Revenue also fell short of expectations by approximately 6.4%. This marks a significant deviation from previous quarters where the company generally met or exceeded expectations.

Market Reaction

Following the earnings announcement, MYR Group’s stock price decreased by 1.83% in after-hours trading, reflecting investor disappointment. The stock’s decline positions it closer to its 52-week low of $86.60, contrasting with the sector’s broader trends which have been more stable.

Outlook & Guidance

Looking ahead, MYR Group anticipates mid-range operating margins of 7-10.5% for its Transmission and Distribution (T&D) segment and 4-6% for its Commercial and Industrial (C&I) segment. The company is focusing on filling the revenue gap left by reduced involvement in clean energy projects while maintaining a selective approach to new projects.

Executive Commentary

Rick Schwartz, CEO, stated, "We believe our chosen core markets are poised for ongoing success," highlighting confidence in the company’s strategic direction despite current challenges. CFO Kelly Huntington added, "We see stronger free cash flow generation this year," suggesting improved financial health ahead.

Risks and Challenges

• Market volatility and changing political landscapes could impact energy infrastructure investments.
• The company’s reduced involvement in clean energy projects presents a risk to revenue streams.
• Competition in core markets like data centers and healthcare remains intense, potentially affecting margins.

Q&A

During the earnings call, analysts inquired about the company’s bidding environment and its approach to fixed-price versus time and equipment contracts. Executives also addressed potential impacts of political changes on energy infrastructure and discussed ongoing challenges in project management.

Full transcript - MYR Group Inc (MYRG) Q4 2024:

Conference Operator: Good morning, everyone, and welcome to the MYR Group Fourth Quarter twenty twenty four Earnings Results Conference Call. At this time, all participants are in a listen only mode. After the speakers’ presentation, there will be a question and answer session. Today’s conference is being recorded.

At this time, for opening remarks and introductions, I would like to turn the call over to David Gutierrez of Dresner Corporate Services. Please go ahead, David.

David Gutierrez, Dresner Corporate Services, Dresner Corporate Services: Thank you, and good morning, everyone. I would like to welcome you to the MYR Group conference call to discuss the company’s fourth quarter results for 2024, which were reported yesterday. Joining us on today’s call are Rick Schwartz, President and Chief Executive Officer Kelly Huntington, Senior Vice President and Chief Financial Officer Brian Stern (AS:PBHP), Senior Vice President and Chief Operating Officer of MYR Group’s Transmission and Distribution segment and Don Egan, Senior Vice President and Chief Operating of MYR Group’s Commercial and Industrial segment. If you did not receive yesterday’s press release, please contact Dresner Corporate Services at (312) 780-7204 and we will send you a copy or go to the MYR Group website where a copy is available under the Investor Relations tab. Also a webcast replay of today’s call will be available for seven days on the Investors page of the MYR Group website at myrgroup.com.

Before we begin, I want to remind you that this discussion may contain forward looking statements. Any such statements are based upon information available to MYR Group’s management as of this date, and MYR Group assumes no obligation to update any such forward looking statements. These forward looking statements involve risks and uncertainties that could cause actual results to differ materially from the forward looking statements. Accordingly, these statements are no guarantee of future performance. These risks and uncertainties are discussed in the company’s annual report on Form 10 K for the year ended 12/31/2024, and in yesterday’s press release.

Certain non GAAP financial information will be discussed on the call today. A reconciliation of these non GAAP measures to the most comparable GAAP measures is set forth in yesterday’s press release. With that said, let me turn the call over to Rick Schwartz.

Rick Schwartz, President and Chief Executive Officer, MYR Group: Thanks, David. Good morning, everyone. Welcome to our fourth quarter twenty twenty four conference call to discuss financial and operational results. I will begin by providing a summary of the fourth quarter results and then will turn the call over to Kelly Huntington, our Chief Financial Officer, for a more detailed financial review. Following Kelly’s overview, Brian Stern and Don Egan, Chief Operating Officers for our T and D and C and I segments, will provide a summary of our segment performance and discuss some of MYR Group’s opportunities going forward.

I will then conclude today’s call with some closing remarks and open the call up for your questions. We finished 2024 with continued improvement in our financial performance in the fourth quarter as we work through the unfavorable impacts from a relatively small group of clean energy projects in our T and D segment and one project in our C and I segment over the course of the year. These projects all reach mechanical completion during the fourth quarter. Our backlog increased to 2,600,000,000 reflecting a healthy bidding environment and ongoing investments in infrastructure to meet growing electricity demand. We continue to expand relationships through multi year master service and alliance agreements, while strategically pursuing additional opportunities to forge new partnerships.

Key market drivers such as system hardening, grid modernization, technology advancement, infrastructure improvements and decarbonization all present opportunities for long term growth across our business. According to the Deloitte twenty twenty five Power and Utilities Industry Outlook released in December, Utilities are responding to this dynamic energy landscape with record capital expenditures, reaching an estimated $174,000,000,000 in 2024. Forecast project these capital expenditures to keep rising in the coming years. Many MYR Group plans to continue to serve as a resourceful, flexible and committed partner to our customers as they endeavor to meet demands for reliable power. Our C and I segment continues to see robust long term opportunities with new and existing customers within our core markets of data centers, transportation, pharmaceuticals, healthcare and clean energy.

The C3 Group’s twenty twenty four North American Electric (NASDAQ:AEP) Transmission Market forecast released in September noted there are more than 170 hyperscale and colocation data centers planned, requiring more than 45 gigawatts of capacity. Our C and I teams helped build new facilities and expand existing ones, while our T and D crews provide grid infrastructure improvements and additions to help deliver the vast electricity demands required of data centers. Increasing demand for electricity offers a promising outlook for our industry, which more than ever needs proven partners with established resources to meet the energy needs of businesses and communities. We believe our chosen core markets are poised for ongoing success, thanks to the significant investments being made in electrical infrastructure and are confident that our hard earned reputation for collaboration, honesty and reliable project delivery positioned us well for future work. Now, Kelly will provide details on our fourth quarter twenty twenty four financial results.

Kelly Huntington, Senior Vice President and Chief Financial Officer, MYR Group: Thank you, Rick, and good morning, everyone. Our fourth quarter twenty twenty four revenues were eight thirty million dollars which represents a decrease of $174,000,000 or 17% compared to the same period last year. This decrease was primarily related to certain clean energy projects in our T and D segment that have reached mechanical completion as well as a decrease in revenue on C and I fixed price contracts, offset by an increase in revenue on C and I T and E contracts. Our fourth quarter T and D revenues were $450,000,000 a decrease of 24% compared to the same period last year. The breakdown of T and D revenues was $267,000,000 for transmission and $183,000,000 for distribution.

T and D segment revenues decreased due to a reduction of $136,000,000 in revenue on transmission projects, primarily related to certain clean energy projects that have reached mechanical completion. Work performed under master service agreements represented approximately 60% of our T and D revenues in the fourth quarter. C and I revenues were $380,000,000 a decrease of 8% compared to the same period last year. C and I segment revenues decreased primarily due to a decrease in revenue on fixed price contracts, offset by an increase in revenue on T and E contracts. Our gross margin was 10.4% for the fourth quarter of twenty twenty four compared to 9.7% for the same period last year.

The increase in gross margin was primarily due to the continued benefit of higher margins on certain completed projects and certain projects nearing completion. These benefits largely related to better than anticipated productivity and previous favorable change orders. Gross margin was also positively impacted by better than anticipated productivity experienced during the fourth quarter. These margin increases were partially offset by a decrease in gross margin related to clean energy projects in T and D that have reached mechanical completion, the unfavorable impact of a C and I project that has reached substantial completion and labor and project inefficiencies. T and D operating income margin was 6.7% for the fourth quarter of twenty twenty four compared to 7.2% for the same period last year.

The decrease was primarily related to losses on certain clean energy projects that have reached mechanical completion. These project losses were due to higher labor and contract related costs as well as labor and project inefficiencies. Combined, the gross profit changes related to certain clean energy projects negatively impacted T and D operating income as a percentage of revenues by 3% in the fourth quarter of twenty twenty four. C and I operating income margin was 3.9% for the fourth quarter of twenty twenty four compared to 2.1% for the same period last year. The increase was primarily due to the continued benefit of higher margins on certain completed projects and certain projects nearing completion.

These benefits largely related to better than anticipated productivity and previous favorable change orders. Operating income margin was also positively impacted by significant estimated gross profit changes related to better than anticipated productivity experienced during the fourth quarter. These increases were partially offset by a single project, which had a negative impact of 2.2% on C and I operating income margin during the fourth quarter. This project reached substantial completions during the fourth quarter. The loss on this project was primarily due to scope additions, increased labor costs related to scheduled compression and lower productivity due to access and workflow issues.

Additionally, C and I operating income margin was positively impacted by a decrease in contingent compensation expense related to a prior acquisition. Fourth quarter twenty twenty four SG and A expenses were $57,000,000 a decrease of $3,000,000 compared to the same period last year. The decrease was primarily due to a decrease in employee incentive compensation costs and a decrease in contingent compensation expense related to a prior acquisition, partially offset by an increase in employee related expenses to support future growth in our operations. Our fourth quarter effective tax rate was 40.9% compared to 32.3% for the same period last year. The increase was primarily due to higher other permanent difference items and the unrecognized benefit of deferred tax assets.

Fourth quarter twenty twenty four net income was $16,000,000 compared to $24,000,000 for the same period last year. Net income per diluted share of $0.99 compared to $1.43 for the same period last year. Fourth quarter twenty twenty four EBITDA was $45,000,000 compared to $53,000,000 for the same period last year. Total backlog as of 12/31/2024, was $2,600,000,000 consistent with the prior quarter and a 2.5% increase from the prior year. Total backlog as of 12/31/2024, consisted of $818,000,000 for our T and D segment and $1,800,000,000 for our C and I segment.

Fourth quarter twenty twenty four operating cash flow was $21,000,000 compared to operating cash flow of $43,000,000 for the same period last year. The decrease in cash provided by operating activities was primarily due to timing of contingent compensation payments associated with the prior acquisition and lower net income. Fourth quarter twenty twenty four free cash flow was $9,000,000 compared to free cash flow of $22,000,000 for the same period last year, reflecting the decrease in operating cash flow, partially offset by lower capital expenditures. Moving to liquidity in our balance sheet, we had approximately $266,000,000 of working capital, $74,000,000 of funded debt and $355,000,000 in borrowing availability under our credit facility as of 12/31/2024. We have continued to maintain a strong funded debt to EBITDA leverage ratio of 0.63 times as of 12/31/2024.

We believe our credit facility, strong balance sheet and future cash flow from operations will enable us to meet our working capital needs, support the organic growth of our business, pursue acquisitions, and opportunistically repurchase shares. Our Board of Directors recently authorized a new $75,000,000 share repurchase program. New programs will expire on 09/05/2025, or when the authorized funds are exhausted, whichever is earlier. I’ll now turn the call over to Brian Stern, who will provide an overview of our Transmission and Distribution segment.

Brian Stern, Senior Vice President and Chief Operating Officer, Transmission and Distribution, MYR Group: Thanks, Kelly, and good morning, everyone. The T and D segment continues to focus on strengthening and growing our market presence by seeking to expand long term relationships and strategically bidding and winning opportunities with new and existing customers. Our fourth quarter twenty twenty four results were steady, thanks to proven business principles of safety, quality and reliability across our balanced portfolio of work. We continue to maintain a stable and diverse pipeline of transmission, distribution and substation projects, working closely with customers to deliver quality results and on time outcomes. Bidding activity remains healthy in the segment and the outlook for 2025 and future years is positive.

Investments to upgrade and aging electrical infrastructure, improve reliability, meet low growth and achieve decarbonization goals, all present opportunities for long term growth. According to the S and P global forecast released in January 2025, aggregate energy utility investments are projected to hit new highs of $2.00 $2,000,000,000 in 2025 and increased to $211,000,000,000 by 2027 as the country strives to meet increasing electricity demand. Our customers require the proven expertise and reliable project delivery and why our group provides in the face of this dynamic energy landscape and we believe this creates opportunities for future growth. Our subsidiaries continue to execute and win additional work across The U. S.

And Canada. In our Eastern region, the L. E. Myers Company won transmission and substation work throughout the Midwest as well as in Virginia and Tennessee, while Harlan Electric and E. S.

Bullis received substation and transmission project awards in the Northeast. Out West, Sturgeon Electric extended a three year master service agreement in Alaska and won transmission, distribution and substation work in Arizona, Oregon, Washington and Utah. Great Southwestern Construction was also awarded new transmission, distribution and substation projects in Texas, Florida, Georgia and the Carolinas. In summary, we believe this is an exciting time to be part of the industry. Our customers rely on us to help them safely meet the increasing demand and deliver reliable energy to communities.

I’m proud of our amazing teams and the commitment they show every day to overcoming challenges and providing exceptional value. Our successes are attributable to them. I will now turn the call over to Don Egan, who will provide an overview of our Commercial and Industrial segment.

Don Egan, Senior Vice President and Chief Operating Officer, Commercial and Industrial, MYR Group: Thanks, Brian, and good morning, everyone. The C and I segment achieved improved results in the fourth quarter compared to previous quarters as our chosen core markets remain healthy and we continue to capture new projects. Our ability to safely and skillfully execute projects of various sizes is creating many long term opportunities in our chosen markets. Bidding activity remains healthy with continued signs of long term stability. The 2025 Dodge Construction Network Outlook released in November 2024 forecasts an increase in total non residential construction, including 7% growth in commercial construction, 4% in institutional construction and 9% in manufacturing.

The American Institute of Architects consensus construction forecast predicts healthy growth in 2025 across our core markets such as data centers, healthcare and manufacturing. Data centers alone are anticipated to see a 22% increase. Our teams continue collaborating with customers to build new facilities and upgrade existing facilities, while leveraging our expertise to place us in leading positions to strategically capture future opportunities for continued success. Across The U. S.

And Canada, our companies continue to perform and pursue an array of projects. In the fourth quarter, Western Pacific Enterprises won healthcare work in Vancouver and Hewan Electric was awarded a large distribution center project in New Jersey. We continue to win additional transportation work in Canada and Colorado while CSI electrical contractors and Hewan Electric captured additional clean energy projects in California and New York. E. S.

Boulos was also awarded a higher education project in Maine and is well positioned for additional project opportunities in the future. In conclusion, when I look at the accomplishments of our employees have achieved, I am inspired by their effort and dedication to serving our customers with integrity. Because of them, our organization remains at the forefront of the industry. We believe the future is promising and we will continue working side by side with our valued customers to safely build the infrastructure we cry to meet the demands of modern society. Thanks everyone for your time today.

I will now turn the call back to Rick, who will provide us with some closing comments.

Rick Schwartz, President and Chief Executive Officer, MYR Group: Thank you for those updates, Kelly, Brian and Don. Our steady fourth quarter performance demonstrates our commitment to sound business strategy and strong operating principles, even as we face headwinds from a relatively small group of projects. We believe that the growth forecast in the markets we serve, a steady pipeline of project opportunities and the continued development of our experienced teams position us well for enduring success. Through both our business segments, we serve as an open and trusting partner for our valued customers who rely on us to safely deliver high quality electrical construction services. Our success is made possible possible thanks to the excellence of our dedicated and talented employees.

I’m grateful for them and their invaluable contributions this year. I would also like to thank our customers for their continued trust and our shareholders for your ongoing support. We are excited about the essential role and where our group will play in the coming years to help create the modern electrical infrastructure our communities rely upon every day. I look forward to working with you in 2025 and beyond. Operator, we are now ready to open the call up for your comments and questions.

Conference Operator: Thank you. At this time, we’ll conduct a question and answer session. Our first question comes from the line of Sangeeta Jain of KeyBanc. Your line is now open.

Sangeeta Jain, Analyst, KeyBanc: Hi, good morning Rick, Kelly. Thank you for taking my question. Can I start by asking you on the bidding environment that you’re seeing in C and I, the type of projects, the geographies and if the potential tariffs are coming up in your discussions?

Rick Schwartz, President and Chief Executive Officer, MYR Group: I would say we’re seeing activity in really all the markets we’re in a lot on the data center side. I think when you’re getting into hospitals and that’s still a lot of activity and then the transit side as Don highlighted in his prepared comments. I think tariffs, the potential of tariffs is always coming up as we get into newer contracts. I think that’s a point that everybody’s talking about. So I would say it’s a very discussed point out there.

And I would say a lot of our contracts are getting provisions in to cover that risk.

Sangeeta Jain, Analyst, KeyBanc: Got it. And if I can follow-up on some comments that you made in your prepared remarks about lower revenue and fixed price contracts in both segments. Can you explain that? Is that a function of a change in how you’re bidding for projects with a bigger focus on T and E contracts?

Rick Schwartz, President and Chief Executive Officer, MYR Group: We like T and E contracts, but we also like fixed price. I think it’s just the mixture of the projects that are coming to us during that quarter. I wouldn’t look at it as a long term trend going forward. We’ve shown we can execute either type of projects, but we did see an increase in kind of the T and E ones over this last quarter.

Sangeeta Jain, Analyst, KeyBanc: Was that in any specific area that you can highlight?

Rick Schwartz, President and Chief Executive Officer, MYR Group: No, it wasn’t in one specific area. It was just the way the work came in.

Sangeeta Jain, Analyst, KeyBanc: Great. Thank you so much.

Kelly Huntington, Senior Vice President and Chief Financial Officer, MYR Group: And Puneet, sorry, just to add on to that. We did highlight in our disclosures that revenue has been coming down on clean energy projects within the T and D side and that is all fixed price work. And I think conversely, you’ve seen our percentage of MSA work has climbed up to 60% of our overall T and D revenue.

Sangeeta Jain, Analyst, KeyBanc: Understood. Thank you, Kelly.

Conference Operator: Thank you. One moment for our next question. Our next question comes from the line of Justin Hauke of Baird. Your line is now open.

Kelly Huntington, Senior Vice President and Chief Financial Officer, MYR Group: Great.

Justin Hauke, Analyst, Baird: I guess, it’s obviously good to see the challenging projects have reached mechanical completion here, which I know is kind of the target for the year end. And I guess the corollary of that would be just thinking about the free cash flow, because it looks like with the completion of those bad jobs, a lot of the unbilled has moved into accounts receivable. And just thinking about the free cash flow in the last couple of years has been kind of challenged as you funded those. What needs to happen to kind of collect the AR on that and kind of bring the DSOs down? And should we think of 2025 as being a much stronger free cash flow year?

Kelly Huntington, Senior Vice President and Chief Financial Officer, MYR Group: Yes, good question, Justin. And similar to my comments on last quarter’s call, we do see stronger free cash flow generation this year. And I would say positive drivers, of course, the increased profitability as we return to more of the mid part of our target operating income ranges for each segment. So that’s a driver. And then as you pointed to also the recent reductions in balances for total pending change orders, that’s down about 40% from third quarter and retainage also down over 20% from third quarter.

So as we see that cash collected, that helps to drive positive cash flow. Now the one thing I would maybe just a couple of factors going the other way. We, of course, quarter to quarter, our cash flows can be lumpy and that really comes back to project timing. And I would say that our selectivity on clean energy projects and kind of the lumpiness of large transmission work can also impact operating cash flow and just kind of the ebbs and flows of that. But yes, just to return to your original question, we do see stronger free cash flows in 2025.

Justin Hauke, Analyst, Baird: Okay. Great. And I guess my follow-up, you guys have given us, at least in the T and D segment, the trailing twelve month revenue contribution from clean energy projects with the last couple of quarters that have helped kind of normalize where the revenue expectations are as kind of we think about those cycling out. Do you have the update as of the year end how much was clean energy projects in the T and D segment?

Rick Schwartz, President and Chief Executive Officer, MYR Group: Yes, it ended up being about 4% for year 4%, yes.

Kelly Huntington, Senior Vice President and Chief Financial Officer, MYR Group: Okay. And that was 4% for the quarter, about 10% on a year to date basis.

Justin Hauke, Analyst, Baird: Okay. Is it fair to think that that’s essentially zero in 2025? That work hasn’t come back in or is there a portion of it that is?

Rick Schwartz, President and Chief Executive Officer, MYR Group: I think for us we’re going yes, I think for us, we’re going to continue to be selective in that market. We like that work overall as Don spoke, he picked up some work in a few areas where we see very good activity and we’ve had very good success in some of the other markets we’re in, where we’ve historically done that on the T and D front. We’ll continue to be very selective. So right now, I wouldn’t we haven’t said we haven’t we’re not taking on any work. I mean, we definitely like that market, but we want to take on that work at the right price.

So we’ll continue to be selective.

Adi Modak, Analyst, Goldman Sachs: Okay. Yes.

Justin Hauke, Analyst, Baird: All right. Fair enough. Thank you for clarifying those two.

Conference Operator: Thank you. One moment for our next question. Our next question comes from the line of Adi Modak of Goldman Sachs. Your line is now open.

Adi Modak, Analyst, Goldman Sachs: Hi, good morning team. Rick, Kelly, just curious if there’s anything that you can share in terms of how you’re thinking about the growth in the two businesses for this year and anything on the margin progression as we roll through the year? I know you don’t have official guidance, but any kind of color there that would be helpful.

Rick Schwartz, President and Chief Executive Officer, MYR Group: I would say on the margin projection, we’re going to right now we anticipate operating at a year basis kind of in that mid range of our targets that we’ve been up at 7% to 10.5% on T and D and the 4% to 6% on C and I. When we’re looking at growth, we still see that on the C and I side, I guess that upper single digit growth within the core T and D segments, but we’ve got to make up for kind of that loss of what we’ve had on the solar side or the clean energy side. So as we said last quarter, there would be a hole to fill and we anticipate trying to fill that best we can and we see the opportunities out there to do it.

Adi Modak, Analyst, Goldman Sachs: That’s super helpful. And then I think you highlighted over 170 hyperscalers, if I heard that right. Can you talk about how many of those are in the core markets that you are exposed to? I know you previously indicated that you want a balanced exposure in the C and I business. But I’m just curious what the competitive landscape is for those core regions and what that means in terms of the size and number of projects that you could be on?

Rick Schwartz, President and Chief Executive Officer, MYR Group: Yes. I would say we’re seeing lots of opportunities. I’ll turn that one over to Don. He deals with that every day.

Don Egan, Senior Vice President and Chief Operating Officer, Commercial and Industrial, MYR Group: We are seeing some of the hyperscalers come into our core markets. And just like we said, we’re going to continue to be diversified in what we focus on. We like to focus on data centers and healthcare and water wastewater work, but there are to answer your question specifically, there are hyperscalers that are moving into our core markets.

Adi Modak, Analyst, Goldman Sachs: Thank you. I’ll turn it over.

Conference Operator: Thank you. One moment for our next question. Our next question comes from the line of John Bratz of KCCA. Your line is now open.

John Bratz, Analyst, KCCA: Good morning, everyone.

Rick Schwartz, President and Chief Executive Officer, MYR Group: Good morning.

John Bratz, Analyst, KCCA: Rick, I have a question for you and Brian and sort of a big picture question. Obviously, the Trump administration is sort of refocusing attention on oil and gas. And I’m curious if there’s more electricity generation via combined cycle, single cycle as opposed to clean energy. How might that affect your business? And what are you hearing from your utility customers in terms of a changing generation mix as a result of the new administration?

And again, how it might influence the opportunities ahead for you?

Rick Schwartz, President and Chief Executive Officer, MYR Group: For us, either way, I mean, whether it’s clean energy or coming from combined cycle plants or anything like that, we’re doing the lines in and out of them. We don’t do that construction of the combined cycle itself and we’re selective on the clean energy side that we do. So though it’s a part of our business, the lines in and out and the substations and the associated work is very strong either way for us. I’ll let Brian add to that.

Brian Stern, Senior Vice President and Chief Operating Officer, Transmission and Distribution, MYR Group: Yes. Rick kind of hit on it. I think our planning cycle with major utility customers has been in motion for a while. So we haven’t seen any shifts and discussions with them as far as a change from the new administration at all.

John Bratz, Analyst, KCCA: Okay. Okay. And Kelly, one question for you. Just curious what the unrecognized benefit from the deferred tax charge was, if you want to call it that?

Kelly Huntington, Senior Vice President and Chief Financial Officer, MYR Group: Sure. So that just had an overall impact on the effective tax rate for the quarter and the year and really just comes to the sort of unevenness in profitability we had this year across the portfolio. So a little drag there. I think when you look at tax rate overall, obviously, our effective tax rate was higher this year, driven by the higher permanent differences, which a lot of that was really driven by contingent compensation from a prior acquisition and the deductibility limits around that. So that will become less of a headwind as we look forward, but we do expect to still have pressure on our overall effective tax rate relative to history because of the growth in our Canadian operations.

The last thing I’ll mention just maybe while we’re on tax rate as something that’s a little bit unusual relative to the last few years is that we do expect our effective tax rate quarter by quarter to be more even across the year. The last few years we’ve had a tax rate benefit in the first quarter driven by house stock compensation hits the tax rate, and we don’t expect that to be a material driver here in the first quarter of twenty twenty five.

John Bratz, Analyst, KCCA: Okay. Thank you, Kelly.

Conference Operator: Thank you. One moment for our next question. Our next question comes from the line of Brian Brophy of Stifel. Your line is now open.

David Gutierrez, Dresner Corporate Services, Dresner Corporate Services0: Yes, thanks. Good morning, everybody. I’m curious if conversations with customers on these prior challenge projects have completed or finished regarding potential claims or change orders Or is there any potential impact from those discussions that could occur in sometime in 2025?

Rick Schwartz, President and Chief Executive Officer, MYR Group: I would say those conversations are continuing. Some have been settled out. Some discussions are still going on. There always could be possible impacts as you settle out these projects. But as we stand right now, we feel we have them covered as far as the way we’ve reported them.

So I would say everything that way appears to be good and the conversations are ongoing, but there always could be impacts.

David Gutierrez, Dresner Corporate Services, Dresner Corporate Services0: Okay. I guess, can you give us a sense for potential size? Would this be something relatively immaterial? And then I guess, is there potential for there to be a positive impact because you’re pursuing change orders? Or there are also negative potential outcomes?

Just any help there would be appreciated?

Rick Schwartz, President and Chief Executive Officer, MYR Group: The way we’re looking at it is it’s either positive or negative. It’s probably not enough to move the needle when we’re looking at it, but that’s how we see it today as these conversations continue to evolve. We would provide any updates we have. But at this point, not all of them are settled and those conversations are ongoing. So I’m kind of limited on what I can say about them at this point.

David Gutierrez, Dresner Corporate Services, Dresner Corporate Services0: Understood. Thank you. Appreciate it.

Kelly Huntington, Senior Vice President and Chief Financial Officer, MYR Group: Just to reiterate, I mean, we do, we evaluate that and we adjust our estimates on that month by month, quarter by quarter. So what we’re presenting in our year end financials reflects the most up to date information we have.

David Gutierrez, Dresner Corporate Services, Dresner Corporate Services0: Understood. Appreciate it. Thank you.

Conference Operator: Thank you. I’m showing no further questions at this time. I would now like to turn it back to Rick Swartz for closing remarks.

Rick Schwartz, President and Chief Executive Officer, MYR Group: To conclude, on behalf of Kelly, Brian, Don and myself, I sincerely thank you for joining us on the call today. I do not have anything further and we look forward to you working for we look forward to working with you going forward and speaking with you again on our next conference call. Until then, stay safe.

Conference Operator: Thank you for your participation in today’s conference. This does conclude the program. You may now disconnect.

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