Q1 2023 MYR Group Inc. Earnings Call

April 27, 2023

At this time for opening remarks, and introductions I would like to turn the conference over to David took care of Dresner Corporate services. Please go ahead David.

Thank you 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 2023, which were reported yesterday.

Joining us on today's call are Rick Swartz, President and Chief Executive Officer.

Okay.

Kelly Huntington Senior Vice President and Chief Financial Officer.

Cooper Senior Vice President and Chief operating officer of MYR, groups' transmission and distribution segment.

And Jeff Monica 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 3127263600, and we will send you a copy.

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 MYR group Dotcom.

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 them our group's management as of this date and MYR group assumes no obligation to any 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 December 31.

2022.

The company's quarterly report on Form 10-Q for the first quarter of 2023 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 Swartz.

Thanks, David Good morning, everyone welcome to our first quarter 2023 conference call to discuss financial and operational results I.

I will begin by providing a summary of our first quarter results and then we'll turn the call over to Kevin Kelly hunting tenants, our Chief financial Officer for a more detailed financial review.

Following Kelly'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 performance and discuss some of them are groups opportunities going forward. I will then conclude the call I will then conclude today's call with some closing remarks and open the call up for your questions.

We entered 2023 with positive momentum fueled by record setting financial performance in 2022, and a substantial backlog, resulting in a solid first quarter. We continue expanding strong customer relationships through master service agreements and alliance agreements and perform ongoing work for our long.

<unk> clients across our districts, we also see healthy bidding activity and strategically capture new work to position us for future growth.

Clean energy remains a key market driver is grid modernization reliability and system hardening continue to create opportunities as our clients strive to achieve carbon neutral goals and better serve their customers.

The solar market insight report 2022 year end review.

Released by the Solar Energy Industries Association in Wood Mackenzie in March.

<unk>, a 41% growth in solar installations in 2023.

Solar installations battery storage and other clean energy transformation projects in an expanding market our opportunities we continue to track and pursue.

Similarly, our C&I segment maintains a healthy backlog with numerous projects in the pipeline to allow for potential growth solar battery storage and other clean energy projects continue to expand our portfolio of work, while also strengthening long term relationships with our preferred clients.

Data centers and healthcare our other core markets, we believe could provide steady opportunities moving forward.

The remaining a strong and nimble partner, while executing projects with superior superior quality enables us to offer unparalleled value to our customers and develop future opportunities. We remain committed to the safety training and development of our talented employees and I. Thank them for their hard work and dedication our financial.

Results in performance continued to reflect solid consistent long term growth, which we believe will lay the foundation for future success and opportunities.

Now Kelly Kelly will provide details on our first quarter 2023 financial results.

Thank you Rick and good morning, everyone.

Our first quarter 2023 revenues were $812 million.

This represents an increase of $175 million or 27% compared to the same period last year.

Our first quarter T&D revenues were four.

$445 million.

An increase of 22% compared to the same period last year.

The breakdown of T&D revenue, but the $298 million for transmission.

And $147 million for distribution.

The T&D segment revenues increased <unk>.

Primarily due to an increase in revenue on transmission projects.

Including revenues related to clean energy.

And an increase in revenues on distribution project.

Approximately 50% of our first quarter T&D revenues related to work performed under Master service agreement.

Sure.

C&I revenues were $366 million.

An increase of 35% compared to the same period last year.

The C&I segment revenues increased due to higher revenue in certain geographical areas include.

<unk> revenues related to clean energy.

Our gross margin was 10, 4% for the first quarter of 2023.

Compared to 12, 6% for the same period last year.

Decrease in gross margin was primarily due to labor inefficiencies.

All of which were caused by inclement weather and supply chain disruptions experienced on certain projects.

Gross margin was also negatively impacted by an increase in costs associated with an adjustment to sales tax accrual for prior period and one of our C&I operating areas as.

As well as rising costs associated with inflation.

These margin decreases were.

Partially offset by better than anticipated productivity on a project.

<unk> operating income margin was seven 4% for the first quarter of 2023.

Compared to eight 3% for the same period last year the.

The decrease was primarily due to labor inefficiencies caused by inclement weather and supply chain disruptions experienced on certain projects.

C&I operating income margin was two 9% for the first quarter of 2023 compared to three 7% for the same period last year.

The decrease was primarily due to labor inefficiencies.

All of which were caused by inclement weather and supply chain disruptions as well as a sales tax accrual adjustments and inflation, partially offset by better than anticipated productivity on our projects.

First quarter 2023, SG&A expenses were $57 million, an increase of $3 million compared to the same period last year.

The increase was primarily due to an increase in employee related expenses.

To support the growth in our operation and an increase in employee incentive compensation costs.

First quarter 2023 interest expense was $600000 an increase of $100000 compared to the same period last year.

The increase was primarily due to higher interest rates, partially offset by lower average debt balances during the first quarter of 2023 as compared to the same period last year.

Okay.

Our effective tax rate for the first quarter of 2023 was 14, 4% compared to 15, 4% for the same period last year.

<unk> tax rate in both periods benefited from the favorable impact of stock compensation excess tax benefits.

First quarter 2023, net income was $23 million or $1 38 per diluted share.

Compared to $21 million or $1 21 per diluted share for the same period last year.

First quarter 2023, EBITDA was $41 million.

Compared to $40 million for the same period last year.

Total backlog as of March 31, 2023, with $2 67 billion.

A record high and was 11, 11% higher than a year ago.

Total backlog as of March 31, 2023 consisted of 128 billion for our T&D segment.

139 billion for our C&I segment.

First quarter 2023, operating cash flow was $37 million compared.

Compared to operating cash flow of $21 million for the same period last year first quarter 2023 free cash flow was $18 million compared to free cash flow of $7 million for the same period last year.

The increase in operating cash flow, partially offset by higher capital expenditures to support our organic growth.

Moving to liquidity and our balance sheet.

We had approximately $223 million of working capital $26 million of funded debt and $363 million in borrowing availability under our credit facility as of March 31 2023.

We have continued to maintain a strong funded debt to EBITDA leverage ratio at 0.14 times leverage as of March 31 2023.

We believe that our credit facility strong balance sheet and future cash flow from operations will enable us to meet our working capital needs to support the organic growth of our business pursue acquisitions and opportunistically repurchase shares.

I'll now turn the call over to Tod Cooper, who will provide an overview of our transmission and distribution segment.

Thanks, Kelly and good morning, everyone.

The T&D segment dealt with impactful weather throughout the U S.

Steve and impressive performance for the first quarter of 2023.

Our skilled construction teams navigated the challenges of extreme rate in California.

Heavy precipitation in portions of the northeast and southeast, which helped to minimize negative impacts.

We are thankful for their efforts and commitment to MYR group and our customers.

Our current project portfolio still consist of a good mix of smaller to midsized projects.

Mr Service agreement, where large transmission projects in multiple projects related to clean energy.

Clean energy market.

Create opportunities.

And as Rick mentioned forecasted increases in solar installations, and battery storage or potential areas of growth in 2023 and beyond.

The Edison Electric Institute Capital expenditure report published in September of 2022.

Also a projected 159 $2 billion of spending in 2023 by industrial utilities in the United States.

Nearly $17 billion more than the previous forecast.

Investments in integration of clean energy sources grid modernization system hardening and transmission expansion remains a key drivers for this project to spend.

Bidding activity remains steady in our west region with numerous large projects.

Ancillary projects hitting the market for bid.

We continue to perform ongoing work for long term clients throughout the west, including selling energy Southern Cal that assume Aps Tucson electric power and the Bonneville power authority.

We are also pleased to report the Sturgeon Electric was recently awarded three year contracts.

California, Edison and NV energy for distribution services.

Also in the West our subsidiary MYR Energy service is active in pursuing multiple project opportunities in California.

Our eastern region completed a number of projects in the first quarter, while receiving a variety of new project awards for solar installations substation construction transmission maintenance and energized structure replacements.

Subsidiary as Boulos reached substantial completion on two battery storage system project and began construction on multiple solar projects this quarter.

All while continuing to win work with long term clients in their market.

Our subsidiary the early milestones was awarded multiple contracts for substation projects slated to begin in 2020 for transmission and substation Msas in Iowa in Florida.

And the 30 mile 230 kv transmission project in the mid Atlantic region.

Supply chain issues created some material chip bergh districts across the segment as the demand for transmission materials stress the few project timelines.

However, our strong backlog healthy bidding activity and the influx of new work.

The distresses related to supply chain constraints.

We continue to monitor Spuds Institute.

They are taking a proactive approach, but with these strategies and implementing solutions with our clients delivered film material related roadblocks.

In summary, we continue to evaluate improve and grow our TMT business.

Our first quarter results reflect our ability to effectively listen to and work with our clients to deliver according to their expectations.

We will remain disciplined in our approach to capitalize on the right opportunities.

We will effectively grow our business by targeting projects.

And investing in the development and safety of our talented teams.

I'll now turn the call over to Jeff <unk>, who will provide an overview of our commercial and industrial segment.

Yeah.

Thanks, Todd and good morning, everyone.

Our first quarter performance in the C&I segment was steady and demonstrates our sound strategy and ability to adapt to supply chain disruptions and lingering inflationary pressure <unk>.

Continued investment in our employees and partnering closely with our clients to seek innovative solutions enable our exceptional execution and capacity to help our customers navigate these market constraints.

We remain diligent and are encouraged by the numerous projects in our pipeline that we believe could allow for continued growth.

The American Institute of architects consensus construction forecast reported in its mid year update projections of a five 4% increase in commercial construction spending and a four 8% climb for industrial construction spending in 2023.

The Dodge construction networks 2023 construction outlook published in January forecast that much of this strong growth to occur in datacenter healthcare and wastewater spending all of which are core markets for our C&I segment.

These are encouraging forecasts that could generate growth for our business.

Our group subsidiaries will continue to leverage their expertise to place us in leading positions to win opportunities in these markets.

Our clean energy portfolio continues to expand as nearly every division of our C&I segment grew its backlog or is pursuing additional opportunities in the clean energy market.

Electrical vehicle charging stations solar and battery storage projects, our growth opportunities and we continue to bid and win work. In these areas are strong backlog is also solidified with projects and other core markets such as water wastewater treatment and transportation.

The same report from Dodge construction network forecast, an 18% increase in non building public works construction in 2023 projecting a spend of 225 billion.

As funding from the infrastructure investment and jobs Act becomes a reality, we continue to monitor these opportunities and pursue work with both existing and new customers.

The healthcare end market remains strong and offers attractive opportunities in several regions.

Canadian subsidiary Western Pacific Enterprises was recently awarded a hospital project. In addition to successfully executing existing healthcare transit and other projects in Western Canada.

We continue to win and execute work in other markets across our companies with transportation projects at airports in Colorado, and California for subsidiary Sturgeon Electric and CSI electric as well as higher education and warehousing projects Project Awards in New York, and New Jersey for subsidiary <unk> Electric.

Sturgeon Electric also continued to add crews to nature semiconductor plants in Arizona opportunity stemming from the U S chips and Science Act passed laid out last August .

To conclude our chosen markets are healthy and the strength of our client relationships are generating a host of complementary pursuits. Our dedicated employees continue to respond to lingering challenges to the business segment with proactive and customer facing communication to help MYR group maintained its leading position in the markets we serve.

<unk>.

We're proud of their dedication and commitment to our organization organizational values and a strong culture they create.

Thanks, everyone for your time today I'll now turn the call back to Rick who will provide us with some closing comments.

Thank you for those updates Kelly, Todd and Jeff <unk>, our first quarter performance reflects our ongoing commitment to strong operating principles and sound business strategies, while remaining proactive and disciplined in a shifting energy landscape.

Our ability to build strong customer relationships identify and pursue new markets and attract and develop talented team members positions MYR group as an industry leader that is viewed as a valued and essential partner by our customers.

I am proud of the performance across both our market segments, which is a testament to the tireless work skill and ongoing training of our amazing employees.

We will continue to invest in the safety and development of our teams across the company because they are the catalyst to our success.

I'd also like to thank Jeff for his contributions to the company over his 32 years of service and in his tenure as CEO as he transitioned towards retirement and welcome Jeff Don Egan as senior Vice President and COO of our C&I segment.

Each of you for your ongoing commitment and support to the success of our organization and I look forward to working with you throughout the year operator, we're now ready to open the call up for your comments and questions.

To ask a question. Please press star one one on your telephone.

For your name to be announced.

To withdraw your question. Please press star one again, please standby, while we compile the Q&A roster.

The first question comes from Alex the wire with Keybanc. Your line is now open.

Hi, guys congrats.

Good morning, Alex.

Good morning.

So we have this high single digit organic revenue guide this year.

Obviously this quarter the growth was a lot higher than the backlog continues to build especially in PND.

I'm just wondering if this high single digit growth is still the right way to think about this year.

Since it kind of implies like the growth meaningfully steps down through the balance of the year.

Is this just a function of larger projects completing or comps getting tougher.

Or is this a conservative view of revenue this year.

I would say, it's probably not a conservative view at this point I mean, we're still seeing supply chain issues out there that can affect the revenue of what we're able to claim in a given quarter. So we see that affecting the movement of the projects.

You kind of saw that ramp up through last year of our revenue growth and it continued this quarter.

But I would still go with that high single digit growth.

Unless the supply chain.

Issues get solved quicker than we think they're going to.

Got it.

Wanted to ask about large transmission bid activity I mean, there continues to be a lot of movement in the news.

It kind of sounds like anything booked this year like really won't have a large impact until next year.

Should we expect any awards this year and is it fair to assume these projects are still meaningfully accretive the T&D margins and you can kind of support margins back in that upper end of that target range.

Yes, I think I'd start by just covering what Todd said during his review of the script and that was really.

Some big weather impacts and we saw that through the first part of his first or second quarter also.

I think everybody is seeing that across the country.

News reports and some of the damage has been done and some of the high water areas. So when we see that it can affect us.

I think when we get into the large project size.

Italy agree anything Thats awarded this year really wouldn't start until next year.

And where there's quite a few projects out there that were actively pursuing so again, we'll see how those go for us it's never a must win project, it's making sure that we have the right cost involved with those projects and we're looking at it from a cost standpoint, and then putting a fair markup on it. So we like the balance of work that we have.

Kind of that small medium and large size work that we have known and we'd like to see that continue and yes. If we do capture a large project. We are usually pretty successful on those projects as far as the financial performance.

Got it and last one just on the C&I margins there was a bunch of different items called out.

Other labor inefficiencies cost inflation and supply chain.

I think you had previously said most of these issues should continue through the first half and stabilized by the third quarter.

Is that still the right view here has anything changed.

Yes.

We continue to see some improvement there.

I think it's lumpy out there is how the improvements are taking place on the supply chain side of it.

Inflation I would say is calm down and on the material side of what we do but that supply chain sales lumpy and we said we hope that what we said is that we saw that improvement through this year hopefully by the fourth quarter getting back to what we would call whatever the new normalized.

Right is it probably won't be back to where it was in 18.

As far as equipment suppliers and how material comes in I think there's going to be always longer building.

Lead times on that but.

But if you look at it.

Hopefully it settles down and get back to the new norm by the end of the year, if not we see that gradual progression, but it could continue slightly into next year.

Really it's hard to say, it's just shifting all the time.

Thanks, I'll hop back in the queue.

Please standby for the next question.

The next question comes from Justin Hauke with Baird. Your line is now open.

Hi, Good morning, good morning, Justin.

I've got I guess two questions. One is maybe a bigger picture one and then the second one I'll follow up.

Smaller but.

One of the questions.

We get a lot is just trying to better understand the mix in your C&I business today or maybe in the backlog.

You talked a lot about clean energy and obviously you've talked about that a lot in the past, but it seemed like it took more of your comments this quarter, but do you have anything and just broad strokes that you can share about.

Kind of what the mix of your backlog looks like today in terms of.

The C&I work in and the different end markets that youre involved in.

Yes, I think we're we've covered in the past I will let Jeff add to this.

We've always said data centers hospitals more of the high Tech work specialized work is where we really go after and then the solar work is something we've been developing since 2010 11 timeframe. So we did a lot on the organic side to grow that over the years in the last few acquisitions, excluding power line really have that component.

Two of them. So it's been a strategy that we've been carrying out like I said since 2010 timeframe to grow this we thought coming clean energy in general whether it's electric vehicle charging stations as a growing part of our company.

Solar stations are.

The odds are.

I wouldn't say.

40% of our business, but it's a growing entity of our business and we continue to see that grow.

We haven't disclosed what percentage that is but I would say, it's growing everyday for us Jeff.

Jeff anything you want to add to that.

Rick I think you answered it well.

The mix is fairly broad.

In C&I and as Rick said the interesting part is the growth in the clean energy across the country. So it's great to be benefiting from that.

Okay.

Fair enough.

I guess the smaller question I guess is for Kelly, but.

All of our stations our.

You talked about the sales tax accruals and just because thats kind of an unusual item that you haven't talked about in the past could you give a little more detail about that and quantify the impact that that had and I guess it was just in C&I business earned or was it both.

Sure happy to take that one so we have a sales tax audit in one of our C&I C&I operating areas that's ongoing.

In C&I and as Rick said the interesting part is the growth in the clean energy across the country. So it's great to be benefiting from that.

Based on our review, we did make some adjustments to our sales tax accruals.

Prior periods to include the sales tax and find material for.

Some projects for tactic from customers, if you exclude that impact in the quarter, our margins would have been much closer to where they were in the last quarter of last year for C&I.

You talked about the sales tax accruals and just because that kind of an unusual item that you haven't talked about in the past could you give a little more detail about that and quantify the impact that that.

Okay, Great. That's helpful. I guess I will I will leave it there and maybe I'll jump back in thank you.

As a reminder to ask a question. Please press star one one on your telephone.

Withdraw your question. Please press star one again.

Please standby for our next question.

The next question comes from Brian Russo with Sidoti. Your line is now open.

Yes, hi, good morning good.

Good morning, just wanted to follow up.

Good morning, just wanted to follow up on the.

Okay, Great no that's helpful.

Our March backlog.

Looks like most of the growth in total backlog has come from TNT.

As a reminder to ask a question. Please press star one one on your telephone to withdraw your question. Please press star one one again please.

Which is up about 200 million from from December .

C&I it looks like its actually down.

About $50 million just trying to.

Just curious.

Are you burning.

Please standby for our next question.

Ni projects that might be lower margin.

Cleaning them.

And that.

The next question comes from Brian Russo with Sidoti. Your line is now open.

Working into our new backlog with better margins.

Just want to understand the dynamic between the two.

I would say on the C&I side.

Good morning, just wanted to follow up good morning, just wanted to follow up on the March backlog.

We are burning through some of the past work, but when you have the supply chain issues that still is affecting some of the current work you have going on so maybe the inflation and other items that are covered in the newer bid. So that's a slight draw on our margin.

But when you look at.

The supply chain issues, they are still affecting us.

Overall with backlog I'm pleased where our backlog is we've always said, it's going to be lumpy, we want to make sure. We have the right contracts in place. Some of these contracts take four to six months to negotiate out and make sure you have the right terms and conditions in place that are acceptable to both us and our customer. So we put a great amount of time in that and we're very patient.

On that.

I would say there is quite a bit of activity on the C&I side, where projects as I've said in the past or our budget at three years in advance we're updating those budgets, we're making sure our clients are aware of them and so in some cases they have to go back for refunding before those projects are awarded and sometimes that takes maybe four to six months to happen.

But very pleased with where our backlog is on both sides of the business.

Okay, Great and then just on the year over year revenue.

In the T&D segment.

It looks like distribution was only up a couple million where the majority of the growth came from transmission and I'm. Just wondering maybe if you could add a little.

Color into what's actually driving.

That growth I know you had a $150 million northeast transmission project that I think was supposed to start this year.

And then I think also.

201 million solar project down in southeast, Texas.

It was also supposed to ramp up so I'm just trying to understand whats.

What's driving transmission versus.

The more modest distribution growth.

Okay, Great and then just on the year over year revenue.

It's really how our clients are awarding the work and just in that given time for us I think we see.

In the T&D segment.

It looks like distribution was only up a couple million where the majority of the growth came from transmission and I'm. Just wondering maybe if you could add a little.

Clean energy growth out there.

It's affected our distribute for our transmission side of the business a little bit, but when you look at.

The overall market very strong and our customers with our alliance agreements can spend it either in <unk> or are either in transmission or distribution. So we're seeing a little more trend on transmission this last quarter.

That growth I know you had a $150 million northeast transmission project that I think was supposed to start this year.

And then I think also.

I think you can see that go back and forth a little bit.

We just want to service our customers and a lot of them when we do both the transmission and distribution work for so it's where their spend is during a given quarter, but very strong markets and the drivers are all in place.

The more modest distribution growth.

It's really how our clients are rewarding the work and just in that given time for US I think we see.

Okay. So then just to follow up Q2 Q3.

The TNT versus C&I mix or historical mix of maybe.

Clean energy growth out there.

Affected or distribute for our transmission side of the business a little bit, but when you look at.

50, 545 on a revenue basis, we'll continue going forward or do you think T&D might.

The overall market very strong and our customers with our alliance agreements can spend at either <unk> or are either in transmission or distribution. So we're seeing a little more trend on transmission this last quarter.

Become a bigger piece of the overall topline.

I think T&D definitely could become a bigger piece of it really depends on the C&I opportunities out there and when those projects as I said those delays slight delays in the award of those projects could take place.

I think you could see that go back and forth a little bit.

We just want to service our customers and a lot of them when we do both transmission and distribution work for so it's where their spend is during a given quarter, but very strong markets and the drivers are all in place.

T&D market is very strong and even the projects that we're talking about the solar project in Texas. It Hasnt really ramped up yet I mean, you see that side. So I do see that change maybe going a little more on the T&D side.

Okay. So then just to follow up.

Think the T&D versus C&I mix or historical mix of maybe.

Farmers have more heavily weighted on that side, but again.

Both our markets I like very much I like our position in both markets.

50, 545 on a revenue basis will continue going forward or do you think T&D might be.

We look to expand both the groups.

Okay, Great and just a follow up on the large transmission question earlier, when you were referring to the MISO tranche one transmission projects that will eventually be put out for competitive bid.

Become a bigger piece of the overall top line.

I think T&D definitely could become a bigger piece of it it really depends on the C&I opportunities out there and when those projects as I said those delays slight delays in the award of those projects could take place.

When do you think we might see.

Activity pick up on that or when.

The awards might be.

Might be announced.

Yes, Brian we're seeing a little bit of pick up on that right. Now we have offered some proposals on a few of the tranche one projects.

As far as have more heavily weighted on that side, but again.

Several other in the planning stages, and we have some meetings set up with them.

Our markets I like very much I like our position in both markets.

As our clients on that throughout the next quarter. So we're seeing more activity.

We look to expand both the groups.

Okay, Great and just a follow up on the large transmission question earlier, when you were referring to the MISO tranche one transmission projects that will eventually be put out for competitive bid.

And I'm trying to get aligned with the participants in tranche one but in addition to that.

We're also seeing.

Other large project opportunities that wasn't specifically.

The thing about micro tranche, one, but we're seeing some opportunities in both east and the west as well.

When do you think we might see.

Activity pick up on that or when.

The awards might be.

Okay got it great. Thank you very much.

It might be announced.

Thanks, Brian .

As a reminder to ask a question. Please press star one one on your telephone.

Yes, Brian we're seeing a little bit of pickup on that right. Now we have offered some proposals on a few of the tranche one projects.

Please standby for our next question Ken.

Several other in the planning stages, and we have meetings set up with some.

The next question comes from Jon Braatz, with Kansas City Capital. Your line is now open good morning, everyone.

As our clients on that throughout the next quarter. So we're seeing more activity.

And I'm trying to get aligned with the participants in tranche one but in addition to that.

Good morning, John .

Rick on.

On the supply chain.

Issues.

You know a lot of companies are saying.

It's getting better.

You brought it up a number of times I guess when you look at it relative to last year, maybe even six months from now.

Is it getting better for you or is it sort of status quo and then secondly.

Is there something specific within the supply chain.

That is giving you more trouble a product or a material or something like that.

Please standby for our next question.

Is it broadly.

So to speak.

I would say, it's fairly broad and I think some of our utility clients are starting to see a little bit of supply chain, where they were promised deliveries and a certain amount of time and those might be another month out silicon effect, our work a little bit.

Good morning, John .

On the supply chain.

You know a lot of companies are saying, it's getting better.

When theyre going to receive that material on the C&I side, we really haven't seen it with the material we supply I mean kind of when Covid started and everything started happening we put in a lot of work to make sure. We had alternate suppliers and we had different ways to build it in different kinds of material we could use.

Is it getting better for you or is it sort of status quo and then secondly.

But I think where we're seeing it on the C&I side is the sequencing of the work because maybe the building still components arent coming in in the same order they would have before.

That is giving you more trouble a product or a material or something like that.

Or is it.

Before and it's causing us to re sequence or where we see that will fund the other parts of the construction and not so much the work bid that we're installing but it affects the work we're installing when we can't get into certain areas at a given time because of those materials arent available from the general contractor or that side of the projects. So we see that flow and.

When theyre going to receive that material on the C&I side, we really haven't seen it with the material we supply.

It affects us it's not it's not a major major draw on our but were not as.

As effective and efficient as we could be on projects.

Okay.

And.

It looks like maybe infrastructure spending will pick up later this year because of all the government funding.

But I think where we're seeing it on the C&I side is the sequencing of the work because maybe the building still components arent coming in in the same order they would have.

And I guess my question is if we're seeing issues now in that regard and sequencing the products and getting everything lined up.

Before and it's causing us to re sequence or where we see that we'll find other parts of the construction and not so much the orbit that we're installing but it affects the work we're installing when we can't get into certain areas at a given time because of those materials are available from the general contractor or that side of the projects. So we see that flow and.

Yes, yes, there is more spending and more more projects.

Is it can it get any better or is it going to stay as it is.

Well I think what I can say is what it's causing a lot of our customers to do now is talk to us early where before we might've been talking to our customers. If I go back, let's say five years, they will be talking to us about a project that without maybe a year or year and a half and now we've got our customers talking to us about.

It affects us it's not it's not a major major draw on our but were not as.

As effective and efficient as we could be on projects.

Okay.

And.

It looks like maybe infrastructure spending will pick up later this year because of all the government funding.

How do we secure the not just the labor, but the material early how do we make sure that you guys are committed to us and what do we need to do to even order material in advance of the project being fully designed so on a lot of those cases, they're getting in the queue earlier, which as I said leads us to.

And I guess my question is if we're seeing issues now in that regard and get in the sequencing and the products and getting everything lined up.

Yes, yes, there is more spending and more more projects.

I guess greater visibility than we've ever seen in the market because we're dealing with customers on projects that are further and further out.

Is it can it get any better or is it going to stay as it is.

So to me its deal.

Well I think what I can say is what it's causing us a lot of our customers to do now is talk to us early where before we might have been talking to our customers. If I go back, let's say five years, they will be talking to us about a project that was out maybe a year year and a half and now we've got our customers talking to us about.

You've got to plan more.

To get that material in the Q.

It helps us Ben the visibility out there is great.

Okay. One last question Kelly.

G&A costs, so I think we're up 6% obviously.

The outlook ahead of us it was pretty solid a lot of opportunities good revenue growth expectations.

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I would've thought maybe the <unk>.

G&A spending might be a little bit higher.

And then it was in the quarter, how do you see that going forward.

Do you see more of a ramp up in G&A to support the growth of the business.

I guess greater visibility than we've ever seen in the market because we're dealing with customers on projects that are further and further out.

We continue to look to find ways to be efficient and also to strengthen our capabilities to support the business and our growth across the board. So I would say that I would expect our G&A as a percentage of revenue to stay in a similar range with those two offsetting as we go forward.

So to me as.

You've got to plan more.

To get that material in the Q.

It helps us Ben the visibility out there is great.

Okay. One last question Kelly.

G&A costs I think we're up 6% obviously the.

Okay, Alright, thank you very much.

The outlook ahead is it was pretty solid a lot of opportunities good revenue growth expectations.

Thanks, John .

I show no further questions at this time.

I would've thought maybe the G&A spending might be a little bit higher.

I would now like to turn the conference back to Rick Swartz for closing remarks.

And then it was in the quarter, how do you see that going forward.

Do you see more of a ramp up in G&A to support the growth of the business.

We.

Turning to look to find ways to be efficient and also to strengthen our capabilities to support the business and our growth across the board. So I would say that I'd expect our G&A as a percentage of revenue to stay in a similar range with those two.

Setting as we go forward.

Okay, Alright, thank you very much.

Thanks, Jeff.

Sure.

I show no further questions at this time.

I would now like to turn the conference back to Rick Swartz for closing remarks.

To conclude on behalf of Kelly Tod, Jeff and myself I sincerely. Thank you for joining us on the call today I don't have anything forward and we look forward to working with you going forward and speaking with you again on our next conference call until then stay safe.

This concludes today's conference call. Thank you for participating you may now disconnect.

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Q1 2023 MYR Group Inc. Earnings Call

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