Q1 2021 MYR Group Inc Earnings Call
Yeah.
Good day, and thank you for standing by and welcome to the M Y Our group first quarter 2021 earnings results conference call at.
And at this time, all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session.
Ask a question during the session you will need to press star one on your telephone. Please be advised that today's conference is being recorded if you require any further assistance. Please press star zero and whatnot.
And I'd like to hand, the conference over to your Speaker today, David Gutierrez of Dresner Corporate services. Please go ahead David.
Thank you Elizabeth and good morning, everyone I'd like to welcome you to the MYR Group conference call to discuss the company's first quarter results for 2021, which were reported yesterday.
Joining us on today's call are Rick Swartz, President and Chief Executive Officer, Betty Johnson, Senior Vice President and Chief Financial Officer, Tod Cooper, Senior Vice President and Chief operating officer of MYR, groups' transmission and distribution segment and.
And Jeff <unk>, Senior Vice President and Chief operating officer of MYR group's commercial and industrial segment.
If you did not receive yesterday's press release, please contact dresner corporate services at 3127 to 630 600, 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 replay of today's call will be available until Thursday may six at 11, a M mountain time by dialing 8558592056 or four zero for 5373 for zero six and entering conference I'd three.
30667, and three nine.
Before we begin I want to remind you that this discussion may contain forward looking statements and.
Any such statements are based upon information available to MYR groups' 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 forward looking statements.
Accordingly. These statements are no guarantee of future performance. These risks and uncertainties are discussed and the company's annual report on form 10-K for the year ended December 31, and 2020 and in yesterday's press release certain non-GAAP financial information will be discussed on the call today for a reconciliation.
And of these non-GAAP measures to the most comparable GAAP measures is set forth in Yesterdays press release with that said, let me turn the call over to Rick Swartz.
Thanks, David Good morning, everyone. Welcome to our first quarter 2021 conference call to discuss financial and operational results I will begin by providing a brief summary, and the first quarter results and then turn the call over to Betty Johnson, Our Chief Financial Officer for a more detailed financial review.
Following Betty's overview, Tod Cooper, and Jeff <unk>, Chief operating officers for our T&D and C&I segments will provide a summary of our segment's performance and discuss some of MYR group's opportunities going forward.
I will conclude today's call with some closing remarks and open the call up for your questions.
We enter 2021 with positive momentum fueled by record setting financial performance and 2020 and a substantial backlog.
Our first quarter results included record high net income of $19 $9 million double the first quarter of 2020, along with increases in revenues gross profit EBITDA and free cash flow as compared to the same period of 2020.
Our backlog at the end of the first quarter was $1 $64 billion, reflecting the ongoing stability and the markets, we serve as well as our competitive strength.
We successfully.
Definitely navigated the challenges presented by the COVID-19, pandemic and 2020.
Our focus remains on anticipating and adapting to client needs as they continue to respond to the evolving conditions related to COVID-19 impacts.
Our T&D and C&I segments are currently experiencing active bidding and project activity.
Major trends and the energy market point to continued investment and clean energy, improving grid resiliency and favorable energy policies. The.
The business strategies of our clients reflect these trends, which present growth opportunities for MYR group.
We continue to position ourselves for opportunities to partner with customers to successfully execute their investment strategies going forward.
Our C&I market continues our C&I market segments have shown resiliency through the pandemic and I am excited about the future opportunities are.
Our pipeline includes projects from a diverse range of customers and work types, our focus on technical and complex facilities position us well to capitalize on the increased opportunities within the market.
Our T&D and C&I segments continue to build high performing teams and diverse capabilities to support growth opportunities and the market.
And alignment with our values MYR group companies are committed to continuous improvement and innovation, we openly share best practices with customers to strengthen our partnerships and work to enhance the value we bring to their business.
And our commitment to excellence and safety project delivery and the development of our team members contributes to the recognition of MYR group is leading company within the industry.
We are proud of our first quarter performance and are excited to continue to implement our strategies for generating growth and delivering stockholder value now.
And now Betty will provide details on our first quarter of 2021 and financial results.
Thank you Rick and good morning, everyone.
On today's call I'll be reviewing our quarter over quarter results for the first quarter of 2021 as compared to the first quarter of 2020.
Our first quarter 2021, and revenues were $592 $5 million. This represents an increase of $74 million or 14, 3% compared to the same period last year.
Our first quarter Candy revenues were $314 $9 million and increase of 21, 5% compared to the same period last year.
The breakdown of T&D revenues was $211.2 million for transmission and <unk>.
$103 $7 million for distribution.
The T&D segment revenues increased primarily due to an increase in revenue and large sized projects.
Approximately 50% of our first quarter T&D revenues related to work performed under Master services agreement.
C&I revenues were $277 $6 million with an increase of seven 1% compared to the same period last year.
And C&I segment revenues increased due to an increase in revenue and medium sized projects. Additionally.
Additionally, revenues during the first quarter of 2000, and 'twenty were negatively impacted by slight slowdown and C&I work and certain geographic areas related to the COVID-19 pandemic.
Our gross margin was 13% for the first quarter of 2021 compared to 11, 9% for the same period last year.
The increase in gross margin was primarily due to better than anticipated productivity and certain projects and a favorable job closeouts.
These improvements were partially upset by inclement weather experienced other projects and favorable pending change order adjustments and certain project and labor inefficiencies on certain projects.
SG&A expenses were $49 $6 million and increase of $4.6 million compared to the same period last year and increase was primarily due to an increase and employee incentive compensation costs, and an increase and contingent compensation expense related to a prior acquisition.
First quarter 2021, net income was $19 $9 million for $1.17 per diluted share.
Both of which were record highs for MYR and.
Parents, and $9 $9 million or 59 cents per diluted share for the same period last year.
Total backlog as of March 31, and 2021 with $1.64 billion and was six 7% higher than a year ago total backlog as of March 31, 2021 consisted of $694.5 million for our T&D segment and <unk>.
$148 $8 million for.
And for our C&I segment.
Turning to the March 31, 2021 balance sheet, and we had approximately $217 $5 million of working capital $29 $7 million of funded debt and 300, and it's good to point $7 million and borrowing availability under our credit facility.
We have continued to focus and strengthening our balance sheet and and fluke proving our free cash flow.
Free cash flow came in strong for the period at $52.4 million and was a record high $157.1 million for the trailing 12 months, providing a net cash position of $43 $6 million as of March 31, and 2021.
Our funded debt to EBITDA ratio has continued to stay strong at 0.2 times leverage as of March 31 2021.
We believe that our credit facility strong balance sheet and future cash flows from operations will enable us to meet our working capital needs.
Clinton and investments overall growth initiatives and bonding requirements.
In summary, we had improvements this quarter and revenue gross profit net income earnings per share EBITDA free cash flow on a debt to EBITDA leverage and backlog compared to the prior year.
Additionally, and the first quarter of 2021, we set a new record high for gross profit net income earnings per share and EBITDA.
I will now turn the call over to Todd Cooper, who will provide an overview of our transmission and distribution segment.
Thanks, Betty and good morning, everyone.
Our T&D segment performed well and the first quarter of 2021.
Our current project portfolio remains a mix of smaller to midsized projects alliance agreements and some larger scale projects.
Our bidding activity and success rate resulted in a nice backlog with continued growth and EPC Master service agreements and renewable energy opportunities, which remain a focus area for growth at MYR group.
As I discussed and our last call MYR group recently surveyed executive leaders from more than 20 of our top <unk> customers and our annual strategic insights survey.
Nearly all of the leaders and knowledge that significant investments in transmission and distribution infrastructure our net.
This area to support a transition to reduce emissions and carbon free generation.
Over the day.
Delays and complexities associated with regulatory compliance remains an ongoing concern for executives focused on leading the energy transformation.
President <unk> recently announced.
Making jobs plan calls for the creation of a new grid deployment authority within the department of energy and.
New entity would be focused on better leveraging existing rights of way and support and create a finding of some tools just for additional high priority high voltage transmission lines.
Current political climate indicate supported investments and implementation of new and upgraded electrical infrastructure.
Complement and environmental and economic goals.
Our T&D companies continue to strengthen and expand their market presence and we are steadily growing our position and the solar energy storage market.
And the first quarter, we received verbal commitments from three groupings of EPC solar projects totaling just under 200 megawatts.
Each of these projects represent new customers to MYR group and.
And we are targeting additional projects that are selected.
And would create work for our solar team for the early part of 2022.
These projects are also expected to provide growth opportunities for other subsidiary companies.
We also continue to pursue a number of large projects and programs and the market with established utilities on both and EPC as well as construct only basis.
We see the demand for larger more sophisticated contractors and the T&D space, increasing and the barriers for entry should allow us to continue improving our market share.
For Western region of our business remains very active.
Serge and electric company continues to provide ongoing services for excel energy under a multi year Alliance agreement.
Arizona market and is providing steady ongoing work and growth opportunities through strong relationships with three major utilities and our Portland office is actively engaged and projects with Portland General Electric Pacificorp and Burns <unk> Mcdonnell.
Stern region of our business has experienced solid bidding and project activity.
Harlan Electric recently executed a five year extension with DTE energy and.
Was awarded three transmission projects for average source.
Irwin also partnered with MYR energy services to be selected as the EPC contractor for Aep's Howard's Cyrus project in Ohio.
And the Midwest belly Myers is actively engaged.
And work with Midamerican energy and Ren IPL and <unk> to name a few.
And Texas, we have multiple crews of the Ali Myers company angry southwestern and construction supporting Centerpoint energy and encore respectively.
In summary.
We continue maintaining our focus on safety and operational excellence.
The death of our strategies to remain equipped to support our customers and the dynamic and rapidly changing energy market.
I'll now turn the call over to Jeff <unk>, who will provide an overview of our commercial and industrial segment.
Thanks, Todd good morning, everyone.
Our C&I market segments have shown resiliency throughout the pandemic and our results through the first quarter demonstrate that our strategy is sound and our ability to adapt rapidly is proving successful. We are also pleased that several projects who start dates were pushed at the onset of the pandemic have announced that they will begin construction.
This year.
Although the delayed starts disrupted our planned workflow and 2020. They also allow for some unexpected benefits such as greater coordination time creative alternatives to improve cost efficiency and a more connected relationship between all the team members.
Getting and bidding activities experienced a notable increase and quantity throughout the quarter and we are pleased with the quality of the projects and our pipeline, leading the way and the first quarter had been numerous projects and E Commerce data security and data storage.
These include several expansions upgrades and sizable greenfield builds.
In addition to these already anticipated projects there were a number of new opportunities and are surprisingly wide breadth of building types, which include medical research manufacturing higher education health care rooftop solar power generation.
Water treatment and various forms of warehousing.
Activity levels differ across our regions with some regions returning to pre COVID-19 levels, while others are still facing significant headwinds.
The American Institute of Architects reported increases and architectural billing index and January February and March This return to the index to positive territory for the first time since the pandemic began.
Positive trend reflects increased C&I investment and should lead to continued improving bidding opportunities for our business.
The Dodge momentum index increased seven 1% in February and another one 7% in March this.
And this quarter's increase marked the highest level and the momentum index since the pandemic began.
Dodge expects total construction activity gains of $771 billion and 2021, while certainly positive news the question of sustainable gains still remains.
And sensus amongst economists and industry experts is that the construction industry will rebound and a case shaped recovery with some sectors growing positive while others continue to contract. We are pleased that the strategic decisions to focus our future on e-commerce renewable related projects and transportation health care.
And industrial water projects are proving beneficial as these industries.
Are all showing positive forecast for the coming years.
The industry is experiencing notable increase in comp and competition and some market segments, where the projects are commoditized and relationships have less importance, but our chosen markets have remained primarily relationship driven and expertise focused as everyone in the industry works their way through the post pandemic site.
We believe our clients will continue relying on trusted contractors, who will help them navigate through the numerous industry challenges present in today's economy.
And to wrap up I will address the pending infrastructure legislation titled The American Jobs Act, while it is too early to understand the full impact of the proposed legislation. There is good reason to believe that MYR group is well positioned to benefit from its approval since the current planned directly relates to the work we perform.
In general we are pleased with the improving activity on inquiries for projects and planning and enthused by the bidding activity on fully funded projects.
Thanks, everyone for your time today I'll now turn the call over to Rick who will provide us with some closing comments.
Thank you for those updates Betty Tod and Jeff Our first quarter 2021 performance reflects our ability to build strong customer relationships and identify and pursue new markets and attract and develop talented team members, who deliver excellence and all they do and more.
And our group is strongly positioned as an industry leader, who has viewed as value and essential partner by our customers.
2021 represents a great opportunity for MYR group to build upon our success, while implementing effective strategies to increase the value we deliver to customers team members and stockholders I. Thank each of you for your ongoing commitment and support to the success of this organization and I look forward to working with you.
And to advance our vision and realize our business goals. Operator, we are now ready to open the call up for comments and questions.
As a reminder to ask a question you will need to press star one on your telephone.
And draw your question press the pound key please standby, while we compile the Q&A roster.
Your first question is from the line of Sean Eastman with Keybanc capital markets.
And in China.
Compliments.
First I'd, just like to try and get a sense for.
Weather T&D segment margins Ken.
Sustain above that sort of historical targeted and thanks to 90% range.
Would you be able to quantify the closeout benefit and the first quarter and maybe speak to how much the large project contributions helping margins and.
You know what the phasing of those large projects and backlog.
Looks like over the next couple of quarters and how.
That dynamic and impact T&D margins.
I'll start and then I'll, let tod add.
I think when you look at our margins and we identified the puts and takes on our on our T&D margin. So for both the good and the bad I think those really offset each other so I would say that the percentage were running at operating margin on the T&D.
On the upper end and we like where it's at and really those two puts and takes offset each other so.
We see that continuing or at least we hope to see a continuing going forward. The large projects did have good contribution and the quarter.
And they'll continue for a while because as we said.
It was delayed by a couple of quarters of getting started so we're off and going now, but that front and as a little heavier than.
Maybe the last end of the project scope. So when you look at that it'll it'll continue for the next quarter next couple of quarters to add a little bit and then stabilize from there.
Todd do you want to talk about the overall market a little bit.
Yeah, Yeah, I mean, what we're seeing right now.
And really are awaiting some there is some lumpiness out there on some awards and we're trying to get some things over the finish line but.
As Richard mentioned.
The large project activities, specifically on a couple of our larger projects has.
Picked up and we'll continue to do so for the next couple of quarters and.
In the meantime, we're going to be pursuing additional large project opportunities that look like they're there, they're well on their way to being fully permitted and and out for bid here sometime soon and so we're pretty excited about where it's at.
Okay terrific that's helpful and then I.
Similarly on the C&I side, and it was really nice to see.
And those margins and inflect up five 1% and the first quarter and was there anything one time in there and it is.
Or are we looking at sort of us and sustained improvement and C&I versus what we've been seeing over the.
Past couple of years.
And as well.
Well, we've seen you know we've always said, we want operate and that four to six were in that 5% range right now and I would say that.
For us it's a good improvement from where we were we got a few of the change order items behind US we still have a few more to go on that side to get through but we see it as a good market for us I think for us really.
And we've talked about before kind of these part a part b projects, where you get a portion of the project to do construct ability and planning and stuff and then the major portion of the project comes out and they'll award that contract a little later.
We have a lot of those part a and that timing of getting the part b going is probably the unknown side and I don't think it's we haven't seen anything canceled and we don't see anything that's going to be canceled right now for what we haven't seen or what we may see as those pushed out by a month or two or a quarter or so in order to happen. So we continue to watch that.
But I think as Jeff said in his script. He is happy about the activity, we see and the market from the bidding standpoint, and the markets. We're in and Geoff you can talk a little bit of just about anything you see that I didn't cover.
Well, it's certainly good to be returning back to that range that were customary too and to work through some of the challenges that.
For a bit of drag on the business for a while but we are back into the range that we believe we can continue to operate in and.
The projects that we have under contract now look healthy and the pipeline equally so we intend to stay there.
Excellent and.
And then and it's also noteworthy and looks like you guys.
Two net cash this quarter.
So I assume you guys are kind of primed up to do an acquisition here at some point I'm, just curious whether you'd like to add more T&D at this point are more C&I.
And maybe something different and.
I guess, maybe particularly on the T&D side do you think you'd be able to acquire and warranty A&D revenues at a multiple.
Hum.
Below where you guys are trading today and I'd be curious to get a sense on that.
I'll, let Betty cover the free cash flow and a minute as far as and our cash position and looking at acquisitions. We've we took we took a holiday last year as we said to make sure. We focused on are our bottom line the integration of the businesses and making sure our balance sheet was back in shape and we accomplished all of those items.
Not that we're happy with where we're at we're always trying to take it to the next level and be a little better.
But with the acquisition front, we continue to see what's out there we continue to explore theres companies, we'd like to have.
But can you get them at the right price can you get a good company at the right price. That's the unknown side. So the good news is we don't have to do anything.
I'd like bulk segments and.
Said that for years that we're in both the T&D and C&I, So I would like to add to both.
Really what opportunities are out there and how good accompanies can we find we're.
And we're not looking to buy a broken company, we're looking to find a good company that's additive to what we do so we will continue to look and hopefully can find something and the next year or so.
Betty anything on free cash flow you want to highlight Oh, yes, just thanks for recognizing that Sean the strong free cash flow and net cash position.
And just as we've said before we.
And.
It's opt in a matter of timing and as you can see and our free cash flow statement.
Capital expenditures are probably on the lower and this quarter. So we anticipate still spending the capital as we normally wouldn't and just a matter of timing.
And so they will pick up later and in the year and then as well, it's just a matter of timing of the flow of cash and especially as you have for some of the larger projects and.
The mix of jobs.
But yeah this quarter was strong and Winton and <unk>.
Dissipate as strong of quarters going full force, but we've got plenty of headwind.
Room too.
To use for our capital and appointment no matter what.
Yeah.
Excellent. Thanks for the time and just nice work all around.
Thank you.
Thank you.
Thank you.
And once again, if anyone would like to ask a question. Please press star one on your telephone.
And your next question comes from the line of Andrew Wittmann with Baird.
Oh, great good morning, and thanks for taking my questions Yeah.
I guess.
And following up a little bit on the margins and the C&I segment to start out with here I mean there.
They are at a level, we haven't seen and a while obviously.
I'm, just trying to get understanding of.
I guess, the sequential change and the margin improvement.
You guys talked about cleaning up some change orders I mean, there was obviously some jobs that werent all great last year is the sequential step up and the margin performance there.
And as much of a result of just like being done with low margin jobs and the prior quarters.
Or can you attributed to other things, including could you. Please clarify the closeouts that you mentioned and the press release.
What was it in which segment was it in.
Was in the T&D segment.
Okay. So that close that was in the T&D segment.
Okay for us.
Yes, the margins on the C&I front go.
I think overall, we did have that.
For those issues have kind of that lower profit work, finishing up last year and kind of those change order negotiations.
We're not completely through the lower margin work.
But we're pretty well through it so I think that that added to where we're at and our performance and then the.
Other side. We've had is we've had a couple of areas as Jeff said in his script rebound quicker than we thought they would.
The COVID-19 issues, we had we had a couple a couple of areas that are responding very well and then we have some that are lagging behind and so some of the areas you would think that.
Would be slower to recover or actually quicker if I had to predicted a year ago I would've said these areas will come back slower, but they're actually coming back quicker. So.
And some good sites out there and it's really what happens over the next six months as far as some of those projects being released about that I talked about earlier, Jeff anything to add from what Youre seeing.
Rick you covered it pretty well all I would add is that there are a number of things that debt.
We are causing some drag and C&I and so some of those things are behind us as we've talked about and.
And as I've mentioned it looks like we're on a pretty good clean run rate right now and Thats, where we intend to stay.
Great. Thank you for that color I guess, sorry go ahead.
I was just going to say when and when you talk about the one time, the when you talk about better than anticipated productivity and certain jobs and then we had offsets.
Those are all pretty close to two offsetting items with if you take them away.
<unk> been a net very minimal minimal impact on a net net basis. So that 5.1 is is.
Is it fairly clean.
<unk> for them with these jobs behind us now.
Got it and the same commentary it sounded like for the T&D segment with that first question that you answered that on a net.
Basis, including the closeout and I guess, maybe that's worth clarifying, including the closeout that you had still net.
Net debt.
Pretty pretty reflective margin performance and the T&D segment this quarter.
Yes, that's correct, yes, Okay, and then I guess, the only thing to make sure you take into mind is we did have extremely good weather.
Across most of the country. So that did help our margins and some I have always had a highlight that because I would say it's above average as far as what we've had.
Good weather wise, not bad weather wise, so it affects our margins and then remember as we move into the summer season.
Part of the transmission work is you cannot work on certain right of ways during that period of time. So make sure you take that into consideration as we and as you look into our future quarters.
Okay. That's helpful. I guess, just as it relates to the large jobs and the T&D segment then.
You've been talking about them coming into the award picture actually for quite some time I think at least over a year, but it sounds like now it's really hitting the income statement here I guess my question is.
How many large projects are you up where you up on in the first quarter and it sounds like Theres still ramping contribution from those projects or maybe other projects also beginning here in the next quarter or two so can you just tell us how many projects you are on right now and then as far as the booking outlook goes.
<unk> been talking about these large projects, obviously, particularly around solar.
Timing pulled forward or moved out on any of those previously you talked about some of these larger solar projects may be hitting backlog and the fourth quarter. So I was just hoping for an update on and that are share as far as our company goes right now we've got what we consider three large projects going so when you look at those they evolved and announced its the its the I 70 projected.
For the solar project that we have and in Nevada, and then it's also the LS power project that we've talked about.
Those are all at various stages so the.
And I 70 project has another two years left on it basically to finish up.
And the Battle mountain and or the Nevada project actually has about six months left to finish on that project and then the LS power. One was the one that we thought would start a couple of quarters earlier and due to some permitting and some other issues. It got extended out and that's what we've really seen push out this last quarter.
The one that's starting so when you look at that Thats, what we have now I'll, let Todd talk about future projects out there that we're chasing and remember any of those projects, we land or 12 months to 18 months, if we do land and before they really hit backlog.
So yes.
Revenue for Im sorry.
And just add to the comment on the deal as far as the Martinez, Scotland project that we did and that.
And the announcement on that thing.
Run through.
Midyear 2023 at least so that's that's a.
Two and a half to three year project.
The other opportunities that we're seeing right now we're seeing some of the and <unk>.
Transmission lines that have been discussed and the west.
Coming out for bid actually.
And.
And then I think Theres a couple of other ones that we're hearing about and we're tracking that are very nice sized projects.
Still have some hurdles to get through but.
I know that there are some some.
Power purchase agreements being signed on a few of them right now and.
There is and intend to get some of those out to bid here in the mid summer. So we're pretty excited about the opportunities that are out there as well as the opportunities on what we typically call midsized projects, which we're.
We're seeing quite a few of the 500 kv transmission lines.
Maybe you don't have the link.
That would get it to what we claim to be a large project, but very nice projects that we.
B C and probably make that start dates as early as this summer to fall and the other ones I mentioned previously it would be.
2022 start dates.
Okay.
Good color I guess I'll leave it there guys have a have a good day everyone.
Thanks, Brian.
And once again, if anyone would like to ask a question. Please press star one on your telephone.
And your next question comes from the line of Brian Russo with Sidoti.
Hi, good morning.
Good morning, Brian learning more and more.
Hey, so just just to clarify or at least summarize your.
Answers for some of the other questions on on margins.
Sure.
Is it safe to say that you're entering a sustained period and which are sales mix has evolved into larger projects and the T&D segment to sustain.
Yes.
The high end of the T&D margins.
Past just the next couple of quarters due to timing.
And I would say not so much just on the large project side I mean, we've talked about the projects we have going we talked about the opportunities, but any large project, we would start for weir.
Were awarded and the next let's say six months wouldn't start for at least another six months as a minimum so I wouldn't say our margins are sustainable based on that I think if you look at our total mix of work right.
Right now and you look at the large small and medium sized projects and you look at it that way I would say that's why we're saying we're trending towards that upper end of our guidance.
Mhm.
Okay, Great and then just on the <unk> power contract.
If it's running through 2023.
How much percent completion did you actually have and this first quarter and I would imagine it ramps up.
Through the middle of.
And the project I mean, how should we think about kind of.
The sequential.
Revenue contribution of that project over the next two or three years.
The way I, usually look at a project like that because of the material component and part of the subcontractor component Youll see it a little heavier on the front that you might see and.
As far as a percentage of the job that within the first 20% of the job you may maybe 30 or 35% other revenue something like that and then as it progresses it levels out.
Okay great.
And.
And your Labor Force now.
Are you do you have enough.
Labor to meet what seems like accelerating and incremental demand on both sides of your business and therefore.
Margins.
And grow faster than that and revenue given that type of scenario.
I would like to say we're in that position.
<unk> always said contractors or there were stone enemy. They want that next project. So even though resources are tight and you don't see it reflected in margins as far as backlog margins are how projects are going we try to always.
I'd say, we've got long term clients, we want to treat them right. We want to make sure. We have a fair margin for what we do but it's still a very competitive market and what we do so and it continues that even with tight labor resources, we've been through this for.
And I've been here a long time, so when you look at it every cycle, we go through where labor really tightened up.
It would really.
Be shown and margins and what Youre able to get work for but it still remains very competitive.
Okay, Great and then.
Okay.
Okay, and then just lastly.
Picture and I can appreciate the commentary on transmission and.
Your current utility customers and.
And there's been a general consensus among.
Utility senior management teams and this earning cycle related to the infrastructure build and.
Due to the clean energy and renewables are a big focus, but it seems as if the biggest opportunity for a lot of these large utilities.
Is.
Trent transmission, but from.
MYR group's perspective, given your mix of business between T&D and C&I and I know, there's a lot of work to do.
And the infrastructure, Bill, but where do you see more opportunity do you see it in the C&I segment in terms of market opportunity or do you see.
The bigger opportunity in these larger multibillion dollars transmission.
Projects that ultimately will be needed.
But it certainly will take time to develop and permit.
For us it assets, both I mean, we see opportunities on both sides.
C&I market, we as I said I mean, we want to hope, we hope that nobody delays on their decisions to move projects.
Forward and Theyre kind of waiting for the economy to recover and certain areas.
We haven't seen any cancellations and we see that as positive, but we like those opportunities we've been building our C&I business.
Through acquisitions, and also organic growth and on our T&D front.
And we very much like that market.
Strong and that market is something we want to continue to grow.
We would have had more acquisitions under that but some of the multiples that are being paid and some of the things that have happened in the past, we haven't been able to capitalize on maybe those opportunities but for for acquisition growth, but when you look at the organic growth and we've had over the last for five years, we will continue to push that site so great opportunity.
It's on both markets and we like both markets we're in.
Okay, Great and one last question if I could you and we didn't hear much about storm response.
Efforts or.
Margins, maybe in the first quarter in Texas, and the Gulf for and the <unk>.
So just curious.
Were you involved in any storm restoration and or does that create.
Near term opportunity.
For maybe weather resignation or upgrades and reliability and even redundancies that might be needed.
And electric transmission down there.
Sure for US It was very little storm work done even in Texas, It wasn't where lines were coming down and it wasn't bad wind it was freezing conditions and weather and ice loading. So it wasn't taking lines down. It was really just breathing things. So we had a lot of different kind of outages.
Things we've worked on there but for the most part it was the crews we've had in Texas. So we have a substantial number of crews and Texas and they moved from doing their day to day work to that storm type work frustration, but not not anything that moves the needle.
I think long term, Texas needs to decide.
They're trying to decide what they're going to do.
More to come on that as we all learn more.
Okay, great. Thank you very much.
Thank you.
Brian.
And once again, if anyone would like to ask a question. Please press star one on your telephone keypad and that is star one to ask a question.
And your next question comes from the line of Noelle Dilts with Stifel.
I know well.
Hi, guys and congrats on another good quarter.
And I was hoping Tod that you could expand a bit more on what youre seeing and solar.
How youre thinking about the size of the opportunity.
And what Youre seeing in terms of the competitive dynamics and also if you could touch on any accidents or hires that you've kind of.
Taken on in order to position yourself, better and that market. Thanks.
First to answer your last question there.
We continue to recruit from the.
Contractors that have had experience and the solar industry to help us look for your experience that we've had.
And we believe that some of the hires that we've had recently or are going to play a key part and the growth of our solar business going forward.
Anytime we have and new business, we wanted to make sure that that business has.
The strong start the ability to grow organically.
And continue and a nice steady pace. So as we started this last year, we were really looking at it.
And as our feet on the ground, but while still having success and with our projects and we've achieved that.
And we will continue to grow that.
And incrementally.
As we can and get resources for it but from.
From a market perspective, I will say that.
You know there are a lot of opportunities that are coming our way.
And the individual's debt.
We brought with us and brought with them.
Along so.
They are there from a from a.
And the competitive standpoint, there is some competition and competition is growing pretty rapidly and that market.
And just over the past year, we've seen and see more people try and get in it and.
Therefore, it's become more competitive.
Right now, we're still able to almost sole source and projects with some people coming to us for.
And for some of the smaller distributor type stuff and even a few of the midsized utility scale solar plants that are out there. So we're going to grow the market, we're not about smart and.
And we think theres great opportunity.
Okay, Great and then more generally.
And I was curious with the inflation that we've seen and steel and some other raw materials. I know you don't have as much direct expenses are there but are you.
Kind of cautious about anything on that in terms of indirect exposure. You know for example, the availability of polls are delays around transmission Paul just.
Curious, how youre thinking about that dynamic thanks.
Well on existing projects I think I think we're good.
But we are closely monitoring situation and especially with the structures and the folks that are out there manufacturing lattice towers and steel poles.
And as always we try to protect ourselves upfront by having conversations upstream with our with our clients as well as downstream with our vendors to make sure that.
The project is executable and the timeframe.
And we just work on contract contractually and both both physicians and up and down to make sure that we're protected and we're monitoring that every day.
In addition to the to the freight situation and it's something that for.
And we're monitoring closely as well as we continue to see those charges go up.
Okay great.
And finally, just on the infrastructure Bell, obviously invite and sell.
A lot of.
Interesting commentary around addressing some of these hurdles that have really plagued the industry for decades.
Tightening preventing and cost allocation.
But how are you guys thinking generally about when that benefit could come through let's say a bill is passed later this year or is this something you know.
We should be thinking about is having an impact and the market over the next three to five years.
Could it be sooner just curious how you're thinking about.
Timing and that time, yes.
For me anything that gets approved and Washington first of all what goes what Bill goes in and what comes out is sometimes altered so we'll see but we think anything that gets approved that way, we will be positive for us, but it would have I would say a minimum of 12 months to 18 months delay before we saw anything come that wages.
Things move, so slow and Washington, and I would probably put that.
Net debt guidance out there, it's probably 12 months to 18 from everyone I've talked to months.
Before we would see anything and that's talking to some of our utility clients and others that are heavy.
Involved and those conversations.
Right Okay perfect.
Appreciate that and thank you.
Thank you.
And once again, if anyone would like to ask a question. Please press star one on your telephone keypad again and that is star one to ask a question.
Yes.
At this time I show there are no further audio questions in queue I will now turn the call back over to Mr. Rick Swartz for closing remarks.
To conclude on behalf of Betty Tod, and Jeff and myself I sincerely. Thank you for joining us on the call today I don't have anything further and we look forward to working with you going forward and speaking with you again on our next conference call until then stay safe.
Thank you and this concludes today's conference call. Thank you for participating you may now disconnect.
No.