• Revenue: $830 million, a decrease of 17% compared to the same period last year.
• TND Revenue: $450 million, a decrease of 24% compared to the same period last year.
• CNI Revenue: $380 million, a decrease of 8% compared to the same period last year.
• Gross Margin: 10.4%, up from 9.7% in the same period last year.
• TND Operating Income Margin: 6.7%, down from 7.2% in the same period last year.
• CNI Operating Income Margin: 3.9%, up from 2.1% in the same period last year.
• SG&A Expenses: $57 million, a decrease of $3 million compared to the same period last year.
• Effective Tax Rate: 40.9%, up from 32.3% in the same period last year.
• Net Income: $16 million, down from $24 million in the same period last year.
• Net Income per Diluted Share: $0.99, down from $1.43 in the same period last year.
• EBITDA: $45 million, down from $53 million in the same period last year.
• Total Backlog: $2.6 billion, a 2.5% increase from the prior year.
• Operating Cash Flow: $21 million, down from $43 million in the same period last year.
• Free Cash Flow: $9 million, down from $22 million in the same period last year.
• Working Capital: Approximately $266 million as of December 31, 2024.
• Funded Debt: $74 million as of December 31, 2024.
• Borrowing Availability: $355 million under the credit facility as of December 31, 2024.
• Funded Debt to Leverage Ratio: 0.63 times as of December 31, 2024.

• Warning! GuruFocus has detected 6 Warning Signs with MYRG.

Release Date: February 27, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• MYR Group Inc (NASDAQ:MYRG) reported a backlog increase to $2.6 billion, indicating a healthy bidding environment and ongoing infrastructure investments.
• The company continues to expand relationships through multi-year master service and alliance agreements, enhancing long-term growth opportunities.
• Gross margin improved to 10.4% in Q4 2024 from 9.7% in the same period last year, driven by better-than-anticipated productivity and favorable change orders.
• CNI segment operating income margin increased to 3.9% from 2.1% in the previous year, reflecting higher margins on completed projects.
• The company maintains a strong balance sheet with $266 million of working capital and $355 million in borrowing availability, supporting future growth and acquisitions.

Negative Points

• Q4 2024 revenues decreased by 17% compared to the same period last year, primarily due to the completion of certain clean energy projects.
• TND segment revenues fell by 24% year-over-year, largely due to a reduction in transmission project revenues.
• Net income for Q4 2024 was $16 million, down from $24 million in the same period last year, with diluted earnings per share decreasing from $1.43 to $0.99.
• Operating cash flow decreased to $21 million from $43 million in the same period last year, impacted by timing of contingent compensation payments and lower net income.
• The effective tax rate increased to 40.9% from 32.3% in the previous year, driven by higher permanent difference items and unrecognized deferred tax assets.

Q & A Highlights

Q: Can you discuss the bidding environment in the Commercial and Industrial (CNI) segment and the impact of potential tariffs? A: Rick Swartz, President and CEO, noted that there is significant activity in data centers, hospitals, and transit projects. Tariffs are a common discussion point in new contracts, and many contracts now include provisions to cover tariff risks.

Q: Could you explain the decrease in revenue from fixed price contracts in both segments? A: Rick Swartz explained that the decrease is due to the mix of projects received during the quarter, not a long-term trend. The company is capable of executing both fixed price and Time and Expense (T&E) contracts, with a recent increase in T&E contracts.

Q: With the completion of challenging projects, how do you foresee free cash flow in 2025? A: Kelly Huntington, CFO, anticipates stronger free cash flow in 2025 due to increased profitability and reductions in pending change orders and retainage. However, cash flow may still be affected by project timing and selectivity in clean energy projects.

Q: What is the current contribution of clean energy projects to the Transmission and Distribution (TND) segment? A: Rick Swartz stated that clean energy projects contributed about 4% of TND revenue for the quarter and 10% for the year. The company will continue to be selective in this market, focusing on projects at the right price.

Q: How do you view growth and margin progression for 2025 in both business segments? A: Rick Swartz expects operating margins to be in the mid-range of target levels, with upper single-digit growth in the CNI segment. The TND segment will focus on core growth to offset the decline in clean energy projects.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.