Q4 2023 MYR Group Inc Earnings Call
Okay.
Operator: Good morning, everyone, and welcome to the MYR Group 4th Quarter and Full Year 2023 Earnings Results Conference Call. At this time, all participants are in a listen-only mode.
Good morning, everyone and welcome to the EM My art groups fourth quarter and full year 2023 earnings results Conference call. At this time, all participants are in a listen only mode.
Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1-1 on your telephone, and you'll then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. This conference is being recorded. At this time, for opening remarks and introductions, I would like to turn the conference over to David Gutierrez of Dresdner Corporate Services. Please go ahead, David.
After the speaker's presentation, there will be a question answer session to ask a question. During this session you will need to press star one one on your telephone and you'll then be sure automated message advising your hand is raised.
Draw. Your question. Please press star one again.
Today's conference is being recorded at this time for opening remarks, and introductions I would like to turn the conference over to David Good dress of Dresner Corporate services. Please go ahead David.
David E. Gutierrez: Thank you and good morning, everyone. I'd like to welcome you to the MYR Group conference call to discuss the company's fourth quarter and full year results for 2023, which were recorded yesterday. Joining us on today's call are Rich Swartz, President and Chief Executive Officer, and Kelly Huntington, Senior Vice President and Chief Financial Officer. Tod Cooper, Senior Vice President and Chief Operating Officer of MYR Group's Transmission and Distribution Sector, and Don Egan, 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 Fresno Corporate Services at 312-726-3600 and we will send you a copy, or go to the MYR Group website, where a copy is available under the 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.
Thank you and good morning, everyone I'd like to welcome you to the MYR Group conference call to discuss the company's fourth quarter and full year results for 2023.
Were reported yesterday.
Joining us on today's call are Rick Swartz, President and Chief Executive Officer.
Kelly Huntington Senior Vice President and Chief Financial Officer.
Todd Cooper Senior Vice President Chief operating officer of MYR, groups' transmission and distribution segment.
And Don <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 600 to 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 webcast replay of today's call will be available for seven days on the investors page of the ml why our group website at MYR group Dot com.
David E. Gutierrez: 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 those expressed. Accordingly, these statements are no guarantee of future performance.
Before we begin I want to remind you that this discussion may contain forward looking statements.
Such statements are based upon information available.
Management.
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, which risks and uncertainties are discussed in the company's annual report.
David E. Gutierrez: These risks and uncertainties are discussed in the company's annual report on Form 10-K for the year ended December 31, 2023 and in yesterday's press briefing. Certain non-GAAP financial information will be discussed on the call today. The reconciliation of these non-GAAP measures to the most comparable GAAP measures is set forth in yesterday's press release. With that said, I will turn the call over to Rick Schwartz. Thanks, David. Good morning, everyone.
Our Form 10-K for the year ended December 31, 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 Yesterdays press release with that said, let me turn the call over to Rick Swartz.
Thanks, David Good morning, everyone welcome to our fourth quarter and full year 2023 conference call to discuss financial and operational results I will begin by providing a summary of the fourth quarter and full year results and then we'll turn the call over to Kelly Huntington, Our Chief Financial Officer for a more detailed financial review.
Richard S. Swartz: Welcome to our fourth quarter and full year 2023 conference call to discuss financial and operational results. I will begin by providing a summary of the fourth quarter and full year results, and then we'll turn the call over to Kelly Huntington, our Chief Financial Officer, for a more detailed financial review. Following Kelly's overview, Tod Cooper and Don Egan, 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 then conclude today's call with some closing remarks and open the call to your questions.
Boeing Kelly's overview, Todd Cooper, and Donigan, 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 then conclude today's call with some closing remarks and open the call up for your questions.
Richard S. Swartz: We finished 2023 with solid financial performance in the fourth quarter and full year revenues of $3.6 billion, setting a record high for the ninth consecutive year. A steady backlog of $2.51 billion reflects a healthy bidding environment and the continued investment in infrastructure to meet growing electrification demands across the U.S. and Canada. Our accomplishments this year demonstrate the strength and expansion of deep client relationships through alliances and multi-year service agreements, while strategically pursuing and capturing new opportunities. A December 2023 report from the Clean Grid Initiative. Electricity demand is forecast to increase from 2.6% to 4.7% in the U.S. over the next five years, with grid planners expecting a growth of 38 gigawatts through 2028, nearly double the 2022 forecast.
We finished 2023 was solid financial performance in the fourth quarter and full year revenues of $3 6 billion.
Setting a record high for the ninth consecutive year.
Backlog of $2 1 billion.
Reflects a healthy bidding environment and the continued investment in infrastructure to meet growing electrification demands across the U S and Canada.
Our comps accomplishments this year demonstrate the strength and expansion of deep client relationships through alliance and multiyear service agreements, while strategically pursuing and capturing new opportunities.
December 2023 report from clean great initiatives forecast electricity demand will increase from two 6% to four 7% in the U S. Over the next five years with.
With grid planner is expecting a growth of 38 gigawatts through 2028, nearly double the 2022 forecasts.
Richard S. Swartz: In total, the report found $630 billion in near-term investment will be required to meet this load growth. MYR Group will continue to serve as a strong and nimble partner for our clients as they strive to meet demands for reliable power. In our C&I segment, data centers continue to provide steady opportunities alongside our chosen core markets, including wastewater, transportation, and healthcare. The same Clean Grid Initiative report forecasts data center growth alone to exceed $150 billion through 2028, as the use of artificial intelligence increases. We continue to track these opportunities and seek to intelligently bid on and execute projects to position us for future success. Grid modernization, reliability improvement, system hardening, decarbonization, and greater usage of hybrid cloud environments and artificial intelligence are the key market drivers that present opportunities for consistent success across our business. The tremendous investments being made in electrical infrastructure are encouraging and highlight why we believe our chosen markets are poised for ongoing success for many years to come. Now Kelly will provide details on our fourth quarter and full year 2023 financial results. Thank you, Rick, and good morning, everyone.
In total the report found $6 billion to $130 billion in near term investment will be required to meet this load growth.
MYR group will continue to serve as a strong and nimble partner for our clients as they strive to meet demands for reliable power.
In our C&I segment data centers continue to provide steady opportunity alongside our chosen core markets, including wastewater transportation and health care.
Same clean grid initiative report forecast data center growth alone to exceed $150 billion through 2028 as the use of artificial intelligence increases.
We continue to track these opportunities and seek to intelligently bid and execute projects to position us for future success.
Grid modernization reliability improvement system hardening de carbonization, and greater usage of hybrid cloud environments and artificial intelligence are the key market drivers that present opportunities for consistent success across our business.
They're tremendous investments being made in electrical infrastructure are encouraging and highlight why we believe our chosen markets are poised for ongoing success for many years to come now.
And now Kelly will provide details on our fourth quarter and full year 2023 financial results.
Thank you Rick and good morning, everyone.
Kelly Michelle Huntington: For the year ended December 31, 2023, we reached record annual revenues of $3.6 billion, full year net income of $91 million dollars, and EBITDA of $188 million. Our fourth quarter 2023 revenue was $1 billion, a record high and an increase of 16% compared to the same period last year. Our fourth-quarter T&D revenues were $592 million, a record high for our T&D segment and an increase of 15% compared to the same period last year. The breakdown of T&D revenues was $403 million for transmission, a record high, and $189 million for distribution.
For the year ended December 31, 2023, we reached record annual revenues of $3 6 billion.
Full year net income of $91 million and EBITDA at $188 million.
Our fourth quarter 2023 revenues were $1 billion, a record high and an increase of 16% compared to the same period last year.
Our fourth quarter T&D revenues were $592 million a record high for our T&D segment.
And an increase of 15% compared to the same period last year.
A breakdown of T&D revenues with $403 million for transmission, a record high and $189 million for distribution.
Kelly Michelle Huntington: T&D segment revenues increased due to higher revenue on transmission projects, primarily related to higher revenue on clean energy projects, as well as higher revenue on distribution projects. Work performed under master service agreements continues to represent approximately 50% of our T&D revenue. C&I revenues were $413 million, a record high for our C&I segment and an increase of 18% compared to the same period last year. CNI revenues increased primarily due to higher revenue related to clean energy projects. Our gross margin was 9.7% for the fourth quarter of 2023, compared to 11.1% for the same period last year. The decrease in growth margin was primarily due to labor and project inefficiencies, some of which were caused by supply chain disruptions and inclement weather experienced on certain projects. Gross margin was also negatively impacted by rising costs associated with inflation and unfavorable job closeouts.
A&D segment revenues increased due to higher revenue on transmission projects, primarily related to higher revenue on clean energy projects as.
As well as higher revenue on this issue about that.
Work performed under Master service agreement continue to represent approximately 50% of our TV revenue.
C&I revenues were $413 million a record high for our C&I segment, and an increase of 18% compared to the same period last year.
C&I revenues increased primarily due to higher revenue related to clean energy project.
Our gross margin was nine 7% for the fourth quarter of 2023 compared to 11, 1% for the same period last year.
The decrease in gross margin was primarily due to labor and project inefficiencies.
Which were caused by supply chain disruption.
Weather experienced on certain projects.
Gross margin was also negatively impacted by rising costs associated with inflation and unfavorable job closeouts.
Kelly Michelle Huntington: These margin decreases were partially offset by better than anticipated productivity and favorable weather on a project. T&D operating income margin was 7.2% for the fourth quarter of 2023, compared to 8% for the same period last year. The decrease was primarily due to labor and supply chain inefficiencies, mainly related to clean energy projects, inclement weather, and an unfavorable job closeout.
These margin decreases were partially offset by better than anticipated productivity and favorable weather on a project.
<unk> operating income margin was seven 2% for the fourth quarter of 2023.
3rd% to 8% for the same period last year.
The decrease was primarily due to labor and supply chain inefficiencies, mainly related to clean energy projects.
Implement weather and an unfavorable job closeouts.
Kelly Michelle Huntington: These decreases were partially offset by favorable weather on a project and better than anticipated productivity. The NI operating income margin was 2.1% for the fourth quarter of 2023, compared to 3.6% for the same period last year. The decrease was primarily due to labor and project inefficiencies, some of which were caused by supply chain disruptions and inflation, as well as unfavorable and unfavorable job closeouts.
These decreases were partially offset by favorable weather on a project and better than anticipated productivity.
DNI operating income margin was two 1% for the fourth quarter of 2023 compared to three 6% for the same period last year.
Increase was primarily due to labor and project inefficiencies stomach, which were caused by supply chain disruptions and inflation as well as unfavorable and unfavorable job closeouts.
Kelly Michelle Huntington: These decreases were partially offset by better than anticipated productivity. Fourth quarter 2023 SG&A expenses were $60 million, an increase of $2 million compared to the same period last year. The increase was primarily due to higher employee-related expenses to support the growth in our operations and an increase in contingent compensation expense related to a prior acquisition, partially offset by a decrease in employee incentive compensation costs. Fourth quarter 2023 interest expense was $2 million, an increase of $600,000 compared to the same period last year. The increase is primarily due to higher interest rates and higher outstanding debt balances during the fourth quarter of 2023 as compared to the same period last year. Fourth quarter 2023 net income was $24 million compared to $25 million for the same period last year. However, net income per diluted share of $1.43 decreased compared to $1.46 for the same period last year.
These decreases were partially offset by better than anticipated productivity.
Fourth quarter 2023, SG&A expenses were $60 million, an increase of $2 million compared to the same period last year.
The increase was primarily due to higher employee related expenses to support the growth in our operation.
And an increase in contingent compensation expense related to a prior acquisition.
Partially offset by a decrease in employee incentive compensation cost.
Fourth quarter 2023 interest expense $2 million.
An increase of $600000 compared to the same period last year.
Greece was primarily due to higher interest rates and higher outstanding debt balances during the fourth quarter of 2023 as compared to the same period last year.
Fourth quarter 2023, net income was $24 million compared to $25 million for the same period last year.
Net income per diluted share of $1 43 decreased compared to $1.46 for the same period last year.
Kelly Michelle Huntington: Fourth quarter 2023 EBITDA was $53 million, compared to $52 million for the same period last year. Total backlog as of December 31, 2023 was $2.51 billion, a slight increase from the prior year. Total backlog as of December 31, 2023 consisted of $960 million for our T&D segment and $1.55 billion for our C&I segment. Fourth quarter 2023 operating cash flow was $43 million, compared to operating cash flow of $94 million for the same period last year. The decrease in cash provided by operating activities was primarily due to the timing of billings and payments associated with project start and completion. Fourth quarter 2023 free cash flow was $22 million compared to free cash flow of $65 million for the same period last year, reflecting the decrease in operating cash flow, partially offset by lower capital expenditure.
Fourth quarter, 2023, EBITDA was $53 million compared to $52 million for the same period last year.
Total backlog as of December 31, 2023, with $2 five 1 billion a.
A slight increase from the prior year.
Total backlog as of December 31, 23 consisted of $960 million for our T&D segment and 155 billion.
Our C&I segment.
Fourth quarter 2023, operating cash flow was $43 million compared to operating cash flow of $94 million for the same period last year.
The decrease in cash provided by operating activities was primarily due to the timing of billings and payments associated with project starts and completion.
Fourth quarter 2023, free cash flow was $22 million compared to free cash flow of $65 million for the same period last year, reflecting the decrease in operating cash flow, partially offset by lower capital expenditure.
Tod M. Cooper: Moving to liquidity on our balance sheet, we had approximately $279 million of working capital, $36 million of funded debt, and $442 million in borrowing availability under our credit facility as of December 31, 2023. We have continued to maintain a strong funded debt to EBITDA leverage ratio of 0.19 times as of December 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, 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. Thank you, Kelly, and good morning, everyone.
Moving to liquidity and our balance sheet, we had approximately $279 million of working capital.
$6 million of funded debt and 442 million and borrowing availability under our credit facility as of December 31, 2023.
We have continued to maintain a strong funded debt to EBITDA leverage ratio of <unk>. One nine times as of December 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.
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.
Okay.
Thanks, Kelly and good morning, everyone.
Tod M. Cooper: The T&T segment achieved solid fourth quarter and full year 2023 results, once again proving that our business principles of partnering closely with our clients and executing our projects safely with expected quality and on-time delivery remain intact and effective. Our expanding relationships with our long-term clients through Alliance and Master Service Agreements and strategically bidding on and winning work with new and existing clients helped us continue to strengthen and grow our market presence. As Rick mentioned, the Clean Grid Initiative forecasts robust investments in the coming years, and we believe there are abundant opportunities for sustained growth in this market. Our strategic insight survey of T&D clients conducted earlier this year had 67% of the respondents planning increased new transmission build over the next five years and validates the Clean Grid Initiative report for the growing electrification demand in the U.S., with 56% of our clients ranking low demand as a high impact factor in their businesses The solar market faced headwinds in 2023.
<unk> segment achieved solid fourth quarter and full year 2023 results once again proving that our business principles with partnering closely with our clients and executing our projects safely with expected quality and on time delivery remain intact and effective.
Expanding relationships with our long term clients through alliance and Master service agreements.
Strategically bidding and winning work with new and existing clients.
It helped us continue to strengthen and grow our market presence.
As Rick mentioned.
Clean grid initiative report forecast robust investments in the coming years, and we believe there are abundant opportunities for sustained growth in this market.
Our strategic insight survey at D&B clients conducted earlier this year at 67% of the respondents planning increased new transmission build over the next five years.
Validates the clean grid initiative report for the growing electric electrification demand in the U S with 56% of our clients' ranking load demand as the high impact factor in their businesses strategic direction.
Yeah.
The solar market faced headwinds in 2023, we mentioned on our third quarter call that rising labor cost project inefficiencies and weather most notably on a few solar projects along the supply chain disruptions affected our financial results.
Tod M. Cooper: We mentioned on our third quarter call that rising labor costs, project inefficiencies, and weather, most notably on a few solar projects, along with supply chain disruptions, affected our financial performance. This is true for the fourth quarter as well, and we continue to work with our clients and project teams to advance these projects to completion. We anticipate that the majority of the field work on these projects will be completed by the beginning of the third quarter. However, our outlook for solar opportunities and ability to execute remains positive as we see rising labor costs stabilizing and supply chain issues becoming less severe. The fourth quarter 2023 Solar Market Insight Report released by the Solar Energy Industries Association and Wood Mackenzie reported 58% growth compared to the third quarter of 2022, and their outlook remains strong for the solar market's trajectory over the next five years, forecasting an average 14% growth annually over that period.
This is true for the fourth quarter as well and we continue to work with our clients and project teams to advance these projects to completion.
We anticipate that the majority of the field work on these projects will be completed by the beginning of the third quarter.
However, our outlook for solar opportunities and ability to execute remains positive as we see rising labor cost stabilizing and supply chain issues, becoming less severe.
The fourth quarter of 2023 solar market insight report.
Leased by the Solar Energy Industries Association, and Wood Mackenzie reported 58% growth compared to the third quarter of 2022.
Our outlook remains strong for the solar market trajectory over the next five years.
Forecasting an average 14% growth annually over that period.
Tod M. Cooper: We will continue to closely monitor and strategically pursue opportunities in the solar market. Within the T&D segment, transmission, distribution, substation, and clean energy projects of varied size, complexity, and capacity continue to create a steady pipeline of. Across the U.S. and Canada, we have won or renewed several MSAs in 2023 and have been successful in securing a nice share of lump-sum transmission, substation, and distribution work. In summary, we are proud of our accomplishments in the fourth quarter and all of 2020. Our teams maintained a strong focus on safety and project execution, positioning us as a strong partner in the T&D industry into the future. And I thank them for their tremendous effort. Increased grid demand and reliability and aging electrical infrastructure, decarbonization goals, and legislative funding remain primary market drivers, and when combined with our operational excellence, position us as well for long-term success in the segment. In closing, as I step down as the Chief Operating Officer of MYR Group's Transmission and Distribution Segment, I'd like to thank Rick and the entire management team for their support throughout my career, as well as the thousands of employees whose hard work and dedication on all of our projects have made MYR what it is today.
We will continue to closely monitor and strategically pursue opportunities in the solar market.
Within the T&D segment transmission distribution substation in clean energy projects are varied size complexity and capacity continued to create a steady pipeline of work.
Ross the USA, Canada.
Won or renewed several msas in 2023 and been successful in securing a nice share of lump sum transmission substation and distribution work.
In summary, we are proud of our accomplishments in the fourth quarter and all of 2023.
Our teams maintained a strong focus on safety and project execution.
Positioning us as a strong partner in the T&D industry into the future and I thank them for their tremendous effort.
Increased grid demand and reliability and aging electrical infrastructure.
Carbonization goals and Legislative funding remained primary end market drivers and when combined with our operational excellence.
Positions us well for long term success in this segment.
In closing as I step down as the Chief operating officer of MYR groups' transmission and distribution segment I'd like to thank Rick and the entire management team for their support throughout my career as well as thousands of employees, whose hard work and dedication of all of our projects have made MRI or what it is today.
Don Egan: I look forward to supporting Rick and the team with other initiatives going forward and in what remains an exciting and dynamic market. I'll now turn the call over to Don Egan to provide an overview of our commercial and industrial sites. Thanks, Todd, and good morning, everyone.
I look forward to supporting Rick and the team with other initiatives going forward and what remains an exciting and dynamic market.
I'll now turn the call over to Don Egan to provide an overview of our commercial and industrial segment.
Okay.
Thanks, Todd and good morning, everyone.
Don Egan: Our C&I segment saw steady growth thanks to healthy bidding activity and our continued ability to safely and skillfully execute projects, while leveraging our strong vendor relationships to mitigate inflationary and supply chain headwinds. Our backlog increased as we captured desirable projects in our core market. And we continue to see and track new opportunities in data centers, transportation, and clean energy. As Rick mentioned earlier, the December 2023 Clean Grid Initiative report forecasts significant growth in data centers across the U.S., driven by the rise of artificial intelligence and the hybrid cloud environment.
Our C&I segment saw a steady growth thanks to healthy bidding activity and our continued ability to safely skillfully execute projects, while leveraging our strong vendor relationships to mitigate inflationary and supply chain headwinds.
Our backlog increases we capture desirable projects in our core markets and we continue to see interact new opportunities in data centers transportation clean energy and health care.
As Rick mentioned earlier, the December 2023, clean grid initiative report forecast significant growth in data centers across the U S driven.
Driven by the rise of artificial intelligence and hybrid cloud environments. The report found investments in data centers as well as new industrial and manufacturing facilities as key drivers for the significant near term investment to meet load growth demands.
Don Egan: The report found investments in data centers, as well as new industrial and manufacturing facilities, as key drivers for the significant near-term investment to meet load growth, with $481 billion in commitments for industrial and manufacturing facilities since 2021, in addition to the announcement of 200 manufacturing facilities this past year, are forecasted to increase from 17 gigawatts to 45 gigawatts of low-demand of low-demand by 2030. These forecasts align with the healthy activity we've seen, with Sturgeon Electric executing and pursuing additional data center projects in Arizona and Colorado. Pharmaceutical manufacturing is another core market showing strong bidding activity across the segment that we continue to monitor and intelligently pursue. Outside of data centers and pharmaceuticals, Western Pacific continues to perform a pipeline of transportation work and monitor exciting transit opportunities in Canada. CSI is executing clean energy and commercial projects across California, while water treatment and health care facilities continue to offer strong opportunities throughout the CNI business.
With 481 billion in commitments for industrial and manufacturing facilities. Since 2021. In addition to the announcement of 200 manufacturing facilities. This past year.
Data centers are forecasted to increase from 17, Gigawatts to 45 gigawatts of low demand.
By 2030 the report out.
These forecasts align with the healthy activity, we've seen with Sturgeon electric executing pursuing additional data center projects in Arizona and Colorado.
Masuda co manufacturing is another core market showing strong bidding activity across the segment that we continue to monitor and intelligently pursue.
Outside of data centers in Pharmaceuticals, Western Pacific continues to perform a pipeline of transportation work and monitor exciting transit opportunities in Canada.
CSI is executing clean energy and commercial projects across California, while water treatment and health care facilities continue to offer strong opportunities throughout the C&I business.
Don Egan: A few of our district offices were negatively impacted from long-term pre-COVID-19 projects that had continued inflationary and supply chain disruptions during the, Most of these projects will be completed during the first half of this year, allowing us to focus on and execute on our healthy backlog of projects. Through our strengths of proven pre-construction service, strong execution, and national buying power, we continue to collaborate with our clients, enabling us to secure additional work. To conclude, our chosen core markets are healthy, and the strength of our current client relationships is generating additional revenue. Our dedicated employees continue to respond to lingering challenges in the business segment with proactive and customer-facing communication that helps MYR Group maintain our leading positions in the markets we serve. We are proud of their dedication, commitment to our organizational values, and the strong culture they create. Thanks, everyone, for your time today.
A few of our district offices were negatively impacted from long term pre COVID-19 projects that had continued inflationary and supply chain disruptions during the quarter.
Most of these projects will be completed during the first half of this year, allowing us to focus and execute on our healthy backlog of projects.
Our strengths are proven Preconstruction service strong execution and national buying power, we continue to collaborate with our clients, enabling us to secure additional work.
To conclude our chosen core markets are healthy and the strength of our current client relationships are generating additional pursuits.
Dedicated employees continue to respond to lingering challenges to the business segment with proactive and customer facing communication that help MYR group maintained our leading positions in the markets we serve.
We are proud of their dedication and commitment to our organizational values and a strong culture they create.
Thanks, everyone for your time today I will now turn the call back to Rick who will provide us with some closing comments.
Richard S. Swartz: I will now turn the call back to Rick, who will provide us with some closing comments. Thank you for those updates, Kelly, Todd, and Don. We are proud of our growth, which reflects our ongoing commitment to strong operating principles, sound business strategies, and our ability to maintain and expand long-term customer relationships across both businesses. We believe the future is promising for our industry as the demand for electrification increases and our communities come to depend on reliable, clean energy more than ever before. Our accomplishments in 2023 are the result of our talented and dedicated employees. Their commitment is admirable, and I appreciate each of them for placing tremendous care in everything they do.
Thank you for those updates Kelly Todd and done we are proud of our growth with three which reflects our ongoing commitment to strong operating principles sound business strategies, and our ability to maintain and expand long term customer relationships across both business segments.
We believe the future is promising for our industry as the demand for electrification increases and our communities come to depend on reliable clean energy more than ever before.
Our accomplishments in 2023 are the result of our talented and dedicated employees their commitment is admirable and I appreciate each of them, replacing tremendous care in everything they do I would also like to thank Todd for his contributions to the company over his 33 years of service.
Operator: I would also like to thank Tod for his contributions to the company over his 33 years of service and in his tenure as COO, as he transitions toward retirement. And I also welcome Brian Stern, the Senior Vice President and COO, to our T&D. Finally, I thank each of you for your ongoing commitment and support to the success of our organization. I look forward to working with you in the future. Operator, we are now ready to open the call up for your comments and questions. Thank you. As I mentioned, at this time, we'll conduct the question and answer session. As a reminder, to ask a question, you'll need to press star 11 on your telephone and wait for your name to be announced.
And in his tenure as CEO as he transitions towards retirement and also welcome Brian Stern as senior Vice President and COO to our T&D segment.
Finally, I. Thank each of you for your ongoing commitment and support to the success of our organization I look forward to working with you going forward operator, we're now ready to open the call up for your comments and questions.
Thank you as just mentioned at this time, we will conduct a question and answer session. As a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, please standby, while we compile our Q&A roster.
Our first question comes from the line of Justin Hauke with Baird. Your line is now open.
Justin P. Hauke: To withdraw your question, please press star 11 again. Please stand by while we compile our Q&A roster. Our first question comes from the line of Justin Hauke with Baird. Your line is now open.
Great.
Good morning, everyone.
Hey, Justin.
Good morning, I wanted to start I guess.
It's been kind of a theme all year and certainly here in the fourth quarter as well with your revenue for the year was really really strong and the margins have been kind of held back here.
Justin P. Hauke: Great. Thank you. Good morning, everyone.
Richard S. Swartz: I wanted to start, I guess, I mean, this has been kind of the theme all year and certainly here in the fourth quarter as well, with your revenue for the year being really, really strong and, by a margin, www.mytrendyphone.com. So for the year, that was 170 basis points. So I guess I'm just trying to understand how much of an ongoing drag some of these projects are going to be. I mean, have they been completed?
In the quarter, you called out the 220 basis points.
Negative gross profit revisions on projects for the year that was 170 basis points. So I guess I'm just trying to understand.
How much of an ongoing drag some of these projects are going to be.
Richard S. Swartz: And, you know, you don't have low margin or zero margin bad jobs that are continuing to run through. Or how should we think about that kind of drag from profit? continuing in 24.
<unk>.
You don't have low margin or zero margin bad jobs, theyre continuing to run through or how should we think about that kind of drag.
From the profit adjustments continuing in 'twenty four.
Richard S. Swartz: Sure, sure. I would look at it on the T&D side. I think we talked about it last quarter that the majority of our issues were really on a handful of solar projects in one geographic area. So with that, those projects, as Tod said during his script, will end, you know, the end of the second quarter and the beginning of the third quarter with field labor. We'll continue to negotiate and go through that side with the, you know, customer and make sure that we get a, hopefully, a fair agreement in the end. But I think that'll continue to have some margin pressures on our T&D side. Without those, we would be operating in the mid-range of kind of our T&D margin profile of that 7 to 10.5%. So, very comfortable that it'll happen.
Sure sure I would look at it on the T&D side I think we talked about it last quarter that the majority of our issues were really on a handful of.
Solar projects in one geographic area.
So with that those projects as Todd said Dara is correct will.
And the end of the second quarter, beginning of the third quarter with field Labor will continue to negotiate and go through that side with <unk>.
With the cut.
Customer and make sure that we get a hopefully.
Hopefully with Eric agreement in the end, but I think that will continue to have some margin pressures on our T&D side without those we would be operating in the mid range of kind of our T&D margin profile of that 7% to 10, 5%.
Richard S. Swartz: These just have a slight drag as these projects near completion. On the CNI side, we've said, if you look at it on a monthly basis, by the end of the second quarter, we'll be back to that 4% operating margin and hopefully have a trajectory above that going forward through the year. And that's really getting those problem projects that were those pre-COVID awarded projects behind us. So we did have some margin degradation during the quarter on a couple of those projects. And then we had material come in on those projects that were low margin. So again, by the end of the second quarter, we see on a monthly basis that margin getting back to that kind of the low end of our margin profile for C&I. I'll stop there and ask any other questions around.
So very comfortable that'll happen. These just to have a slight drag as these projects near completion on the C&I side. We've said if you look at it on a monthly basis by the end of the second quarter, we will be back to that kind of 4% operating margin and hopefully have a projector you're above that going forward through the year.
Thats really getting those problem projects that were kind of that pre COVID-19 awarded projects.
Hind us so we did have.
Some margaret margin degradation during during the quarter on a couple of those projects but.
And then we add material come in on those projects that were low margin. So again.
By the end of the second quarter, we see on a monthly basis that margin getting back to that kind of that low end of our margin profile for C&I.
I'll stop there.
Ask any other questions around.
Justin P. Hauke: Yeah, no, that's helpful to kind of think about, you know, the trajectory of these for the year. The margins, I guess, staying kind of muted here in the first half on those. I guess the, This is the second part of it, top line, www.myrgroupinc.com, 2022 is up 40%, you grew this year revenue up 20, over 20%. Obviously, that's, you know, not sustainable long-term growth www.mytrendyphone.com every year going into 2024. Just kind of something to think about.
Yes.
That's helpful to kind of think about that.
The trajectory of the earnings for the year.
The margins I guess staying kind of muted here in the first half on those.
I guess the.
The second part of it on the top line I'm, just trying to think about the growth expectations for the year.
Ill go back to where your backlog was at the end of 2022, it was up 40%.
Grew this year revenue up 20 over 20%.
Obviously that.
Sustainable long term growth rate I think you've been pretty clear about.
What you can sustainably grow at but with backlog flat now year over year going into 2024.
Richard S. Swartz: Thank you for the top line; I would still look at the high single-digit growth for the year, probably weighted a little more heavy towards the second half of the year. Very positive about what's out there on the C&I side. I mean, as far as opportunities that Don talked about, Todd talked about opportunities on the transmission and distribution side. And then on the clean energy side, we're going to be, you know, continue to be selective on what we take on.
Just kind of how to think about what you are thinking for the topline trends based on the awards that you have.
I would still look at that high single digit growth for the year, probably little weighted a little more heavy towards the second half of the year very positive about what's out there on the C&I side, I mean as far as opportunity that Don talked about Todd talked about opportunities on the transmission and distribution side and then on the clean energy side, we are going.
Be continue to be selective on what we take on we've seen some people taking some low margin work on that side and.
Richard S. Swartz: We've seen some people taking on some low-margin work on that side, and we're willing to—we like that market. We've got people that are well-prepared to do that work, and we've got some very good projects. But again, we'll continue to be selective.
We're willing to we like that market. We've got people that are well prepared to do that work and we got some very good projects, but again, we will continue to be selective and then as I always say in every quarter backlog is always going to be lumpy, but when you look at the opportunities out there I think everything in our script and what I see day to day very active market.
Justin P. Hauke: And then, as I always say every quarter, backlog's always going to be lumpy. But when you look at the opportunities out there, I think everything in our script and what I see day-to-day in a very active market. Great. I'll leave it at that. Thank you very much.
<unk>.
Okay, Great I'll leave it if that's helpful for just kind of thinking about the modeling so thank.
Thank you very much.
Sangita Jain: Thank you. Our next question comes from the line of Sangita Jain with KeyBank Capital Markets. Your line is now open.
Thank you.
Q.
Our next question comes from the line of Sangeeta Jain with Keybanc capital markets. Your line is now open.
Sangita Jain: Yeah, thank you so much for taking my question. I was just wondering if you could share more color on the supply chain comments from your release and your prepared remarks and where those pinch points may be. I'm wondering if it's panel still or if it's more of a balance of plans constraint in terms of switchgears and transformers, maybe, if you could share any more color on that.
Yes. Thank you so much for taking my question.
I was just wondering if you could share more color on the supply chain comments from the release in your prepared remarks, and where those pinch points, maybe I'm wondering if it's PMO still or if it's more of a balanced plans constrained in terms of the switch gears and Transformers, maybe if you could share any more color on that.
Richard S. Swartz: I would say from the all-time, I guess, slow side of the supply chain, it has improved. They're not getting any worse when you talk about transformers or equipment that way. Panels seem to be levelizing out on that supply. Again, we usually don't supply those, but they can affect the progress of our projects if the owners don't get them in time or they come in in a kind of lumpy delivery. So with that, I think we're seeing improvements on that side. We're not seeing anything worsen.
I would say.
The all time.
Slow I guess slow side of the supply chain. It has improved I mean, they are not getting any worse when you talk about transformers, our equipment that way.
<unk> seem to be <unk> out on that supply again, we usually don't supply those but they can affect the progress of our projects at the owners don't get them in time or that come in and all that.
Kind of lumpy type delivery.
So with that I think were.
We're seeing in <unk>.
Movements on that side, we're not seeing anything worse than and in some cases as we've talked about in previous quarters. Our customers are releasing the material portion early now.
Sangita Jain: And in some cases, as we've talked about in previous quarters, our customers are releasing the material portion early now and the equipment portion so we can actually order that in advance of the projects and have it for on-time delivery for future work. So not all negative on that side, but it did have some impacts during this last quarter. Great, thank you. That's helpful.
And equipment portion. So we can actually order that in advance of the projects and habit for on time delivery for future work. So.
Not all negative on that side, but it did have some impacts during this last quarter.
Great. Thank you that's helpful and if I can follow up with one on <unk>.
Richard S. Swartz: And if I can follow up with one on your comment on MSA renewables and a new MSA getting signed, I was just wondering if you're seeing any change of tone on the side of the utilities in terms of, you know, them facing their own regulatory headwinds and if they're rationalizing the scopes of the MSAs in any way. I think they're always looking at the MSAs, but as far as the amount of work we have and our conversations with them, I'm very positive that that work's going to continue and those trends are going to continue. We haven't seen anybody pull back on anything yet.
Comment on MSA renewal and new Msas getting signed I was just wondering if youre seeing any change of tone on the side of the utilities in terms of.
Demonstrating their own regulatory headwinds and if theyre rationalizing the scope of the Msas in anyways.
I think there are always looking at msas, but as far as the amount of work we have in our conversations with them very positive that that works in a continue and those trends are going to continue we haven't seen anybody pull back on anything.
Tod M. Cooper: Todd, is there anything you want to add or any insight you want to give? Todd, is there anything you want to add or any insight you want to give? No, Rick, I think you covered that.
Todd is there anything you want to add or any insight you want to get.
No Rick I think you covered it.
Sangita Jain: You know, the MSAs are really about utilities today trying to lock in resources to get their work done, and that that will continue. We're seeing more clients use this approach. So, you know, we've been excited, especially in 2023 with several of ours coming up for renewal that we were able to renew, so more to come on that front. But, you know, we see more utilities shifting some of their work to the MSA model and staying out of the lump sum at this point primarily doing the resource. Great. That's really helpful. Thank you so much.
The Msas are really about utilities today trying to lock in resources to get their work done.
That continues.
We're seeing more clients use this approach.
So we've been excited especially in 2023 with several large coming up for renewal.
We were able to renew so more to come on that front.
We see more utilities.
Shifting some of their work the MSA model.
The lump sum at this point, primarily due the resources.
Great. That's very helpful. Thank you so much.
Atidrip Modak: Thank you. Okay, thank you. One moment for our next question. This question comes from the line of Atidrip Modak with Goldman Sachs. Your line is now open. Hi, thank you. Good morning, team.
Thank you.
Okay. Thank you one moment for our next question.
This question comes from the line of Adam <unk> with Goldman Sachs. Your line is now open.
Alright. Thank you good morning team.
Atidrip Modak: I just wanted to understand you mentioned some capital allocation towards M&A. But I wanted to dig into that a little bit and see if you could help us understand the nature of the opportunities you see across both segments or end markets. It seems like the competitive landscape is very fragmented on the T&D side, in particular, and the market opportunity seems to have a lot of upside. So I'm wondering what your appetite is to make transformative transactions to increase your footprint? Or do you think it's more reasonable to focus on token type? For us, I would say both.
I just wanted to understand you mentioned some capital allocation towards M&A.
But wanted to dig into that a little bit and see if you can help us understand the nature of the opportunities you see across both segments or end markets. It seems like the competitive landscape is very fragmented on the T&D side in particular and the market opportunity seems to have a lot of upside. So im wondering what your appetite is to <unk>.
Make transformative transactions to increase your footprint or do you think it's more reasonable to focus on tuck in type acquisitions.
Yes.
Richard S. Swartz: I mean, if you look at 2022, we had, you know, 20% growth; roughly 17% of that was organic, the rest was through acquisitions. If you look at last year, we had 20% growth, roughly, and it was all organic. So I think we're always looking for acquisition opportunities. But again, we're always going to be patient on that side. And I think we've shown we can organically grow our business on top of doing acquisitions if they make sense. Thank you for that.
For Us I would say both I mean, if you look at 2022 I mean, we had.
20% growth roughly 17% of that was organic the rest of it through acquisition.
Look at last year, we had 20% growth roughly and it was all organic so I think we're always looking for acquisition opportunities, but again, we're always going to be patient on that side and I think we've shown we can organically grow our business on top of doing acquisitions that may make sense.
Richard S. Swartz: And then on the clean energy side, you said you mentioned you would be selective. I'm wondering if you can talk about the nature of the projects that you're looking at today, the customer base, the size of the projects, and what we should think of as we model our numbers for 2024. Yeah, for us, I think it's just being selective. Again, as we go forward, you know, it's not that that business is 40% of our overall business when we look at the clean energy market, but it's growing every day. And we'll continue to pursue the right opportunities and the ones that make sense, but we do have a margin profile that we want to meet. And, you know, as we've said before, this year, we really want to focus on, so we don't mind growing our top line, and we still see it coming in and kind of that higher single-digit growth. We're really going to focus on that bottom line growth. And this all takes that into account.
Thank you for that and then on the clean energy side. You said you mentioned you would be selective but I'm wondering if you're going to talk about the nature of the projects that youre looking at the data customer base the size of the projects and what we should pick up as we model our numbers for 2024.
Yes.
For Us I think it's just being selective but again as we go forward.
Not that that business is 40% of our overall business and when we look at the clean energy market, but its growing every day and we will continue to pursue the right opportunities and the ones that makes sense, but we do have a margin profile that we want to meet.
And.
As we've said before this year, we really want to focus on that.
We don't mind growing our topline and we still see it coming in in kind of that higher single digit.
We're really going to focus on that bottom line growth in this all takes that into account.
Richard S. Swartz: We want to make sure that the work we're doing that we take on is profitable going forward. Got it. Thank you. I'll turn it over to you.
We want to make sure that the work, we're doing with that and we take on is prop.
Profitable going forward.
Got it thank you.
The door.
Atidrip Modak: Thank you. One moment for our next question. This question comes from the line of Brian Brophy with Stiefel.
Thank you one moment for our next question.
This question comes from the line of Brian <unk> with Stifel. Your line is now open.
Brian Daniel Brophy: Your line is now open. Thanks. Good morning.
Brian Daniel Brophy: Appreciate you taking my question. Just wanted to ask about the high single-digit growth that you mentioned. I think that's overall for 2024 on the top line. Is there anything specific to call out as it relates to T&D versus C&I? Or should we expect high single-digit growth across both of them? Thanks.
Thanks. Good morning appreciate you taking my question.
I just wanted to ask about the high single digit growth that you mentioned I think that's overall for 2024 on the top line is there anything specific to call out as it relates to T&D versus C&I.
Where you expect high single digit growth across both of them. Thanks.
Richard S. Swartz: Right now, I would anticipate it across both segments. I mean, barring something, you know, a project coming in on one side or the other. I mean, we do clean energy on both sides.
Right now it would anticipated across both segments I mean, barring something project coming in on one side or the other I mean, we do clean energy on both sides. So that's an example, where one could come in to <unk>.
Richard S. Swartz: So that's an example of where one could come in to TN; really doesn't matter where that comes into us on that side of the business. But I think you heard the opportunities from both Todd and Don, and those are very strong. And again, very lumpy on the awards.
Really doesn't matter where that comes into us.
On that side of the business, but I think you heard the opportunities from both Todd and Dawn and those are very strong and again.
Richard S. Swartz: It's always going to be lumpy, and it always has been. But when we look at the amount of activity out there, I'm very positive about the amount of work that's out there. Okay, got it. And then I heard from some others that transmission may outgrow distribution here in 2024, just given some of the strengths on the clean energy side, the need to interconnect with data centers, things of that nature. Curious about what you guys are seeing here. Any thoughts on whether transmission or distribution may outgrow this year? Thanks. I don't have a side that's going to outgrow the other one.
Very lumpy on the award side, it's always going to be lumpy and it always has but when we look at the amount of activity out there.
Positive about the amount of work that's out there.
Okay got it and then.
From some others that transmission may outgrow distribution here in 2024.
Given some of the strength on the clean energy side.
Need to interconnect with data centers things of that nature curious what you guys are seeing here any thoughts on whether transmission or distribution may outgrow this year. Thanks.
I don't have any any sites at once can outgrow the other one I think for us, it's where our customers are spending their money they are in a given quarter or given.
Brian Daniel Brophy: I think for us, it's where our customers are spending their money during a given quarter or a couple of given quarters, so it's the type of projects we do. We have MSAs on transmission and distribution for many of our clients, so I don't really care where it comes from. The margin profiles are almost identical.
A couple of given quarter. So its the type of projects. We do we have msas on transmission and distribution for many of our clients.
I don't really care, where it comes from the margin profiles are are almost identical so for us we're not not picky and we havent heard our customers, saying theyre spending more towards distribution and transmission to date.
Richard S. Swartz: So for us, we're not picky, and we haven't heard our customers saying they're spending more on distribution than transmission today. Okay, thanks. I will pass it on. Your line is now open.
Okay. Thanks, I will pass it on.
With Sidoti Your line is now open.
Brian J. Russo: Yeah, hi, good morning, Department. Hey, just to follow up on the transmission and distribution question, we're hearing a lot from utilities about, you know, accelerating resiliency programs, which, generally speaking, get good regulatory support. And I was just wondering if you're seeing that, you know, in terms of maybe your MFA agreements or something outside of that. Yeah, absolutely.
Yes, hi, good morning.
Pardon.
Just to follow up on the transmission and distribution question can you give me a lot from utilities about accelerating.
Resiliency programs.
Which generally speaking.
Good regulatory support.
<unk>.
And I was just wondering if youre seeing that.
In terms of maybe your MSA agreements or something outside of that.
Tod M. Cooper: That's been an ongoing trend for, you know, probably the last four or five years where they've started to accelerate that. And if you think about it, there were some supply chain impacts during COVID and thereafter with some of the equipment associated with it. So, you know, we are seeing it come back a little stronger, you know, a little stronger, period or right now. More focus on that throughout all of our MSAs that, as Rick mentioned, we do for distribution work across the U.S. and even in Canada. Okay, great.
Yeah, absolutely that's been an ongoing trend for probably the last four or five years, where they've they've started to accelerate that and then if you think about it there were some supply chain impacts during curve and thereafter with some of the equipment associated with it.
We are seeing it come back in a little stronger.
A little stronger.
Period are right now we're seeing.
More focus on that throughout all of our Msas.
Rick mentioned, we do for distribution work across the U S and even in Canada.
Okay, Great and then just.
Brian J. Russo: And then just to follow up on I think last quarter, you may have mentioned that you were, you know, actively positioning yourself to bid on some of these high voltage, multi-billion dollar transmission projects in MISO, but there's also a lot of planning, basically all over the country, California, as far as the NYISO, SPP, PJM. And I was just wondering, you know, what stage of the development on your side are we at for some of these projects that may start construction by 2026 and come online between 2028 and 2030? Yeah, I think a year ago we were talking about these things starting to hit the streets and coming out for bid, and today they're still in various stages, but they have advanced some of them to the award stage. And, you know, we're seeing a lot of activity, both bidding and projects being awarded and negotiated at the present time. Okay, great.
Follow up on I think last quarter, you may have mentioned that you were.
You actively.
Positioning yourself to bid on some of these high voltage multibillion dollar transmission projects.
In MISO, but theres also a lot of planning.
Basically all over the country, California.
As far as the NY ESO SPP PJM and I was just wondering what stage of the development on your side.
Are we at.
For some of these projects that may start construction.
2026 and come online.
2028 to 2030.
Yes, I think a year ago, we were talking about these things are starting to hit the streets and coming out for bid.
Today, they are still in various stages, but they have advanced some of them to the award stage.
We're seeing a lot of activity, both bidding and <unk>.
Projects being awarded and negotiated at the present time.
Don Egan: Then on C&I, you know, obviously, you guys are very diversified in terms of end markets. But are there any, you know, could you maybe, you know, point to maybe the top one or two markets that are driving growth more than others, and then maybe, maybe talk about some more longer-term emerging end markets, whether it's manufacturing, reshoring, and then more specific, and then maybe, even more importantly, you know, electric vehicle infrastructure as it pertains to your utility customers? Okay, I can take that.
Okay, Great and then on C&I.
Obviously, you guys are very diversified in terms of end markets, but are.
Are there any could you maybe.
0.2, maybe top one or two markets that are that are driving growth more than others and then may be.
Maybe talk about some more longer term emerging end markets, whether it's manufacturing re shoring and then more specifically and then maybe even more importantly.
Electric vehicle infrastructure as it pertains to your utility customers.
Okay I can take that.
Don Egan: I would answer that as, you know, it kind of depends on the geographic area as far as the target markets are concerned. You know, Data centers, obviously, are a big trend, and we've been talking about that for a couple of quarters. There are obviously parts of the country that are more prone to take on data center opportunities than others, so that's a big focus for ours. As far as EV charging, you know, there's lots of information in the news about EV infrastructure, about EV cars.
I would answer that as kind.
It depends on the geographic area as far as the end markets are concerned.
Data centers, obviously is a big trend and we've been talking about that for a couple of quarters Theres, obviously parts of the country that are more prone to take on data center opportunities than others. So that's a big focus for ours as far as the EV charging there is lots of information in the news about <unk> infra.
Structure about EV cars, we're still in the I think the design of what that's going to look like long term, we're still doing a fair amount of that work now and still monitoring what the progress looks like going forward.
Don Egan: You know, we're still in the design phase of what that's going to look like long term. We're still doing a fair amount of that work now and still monitoring what the progress looks like going forward. Yeah, I would say the other market that's out there on the transportation front is some of the light rail stuff out there. That's a growing market in some areas.
Yes.
I'd say the other market that's out there on the transportation promised some of the light rail stuff out there that's a growing market in some areas that's something that we've been good at in certain geographic locations. So we see that continuing to grow healthcare continues strong and then kind of that manufacturing side I would take all of those kind of.
Don Egan: That's something that we've been good at in certain geographic locations, so we see that continuing to grow. Healthcare is also growing strong.
Don Egan: And then kind of that manufacturing side, I would take all those kind of, you know, along with data centers, is kind of the top tier stuff we're doing. Back to the electrical vehicle side, I think we've always said that was going to be a slower build than what was anticipated. We see it as a great long-term business. But the US isn't, you know. 50% of the vehicles in our country, in my opinion, are going to be electric vehicles by 2027.
A lot with data centers as kind of the top tier stuff we're doing.
Back to the electrical vehicle side I think we've always said that was going to be a slower build than what was anticipated we see it as a great long term business, but the U S.
50% of the vehicles and are in my opinion are going to be electric vehicles by 2027, I think that'd be a lesser amount than that so the improved infrastructure is going to continue to build out but probably at a manageable pace.
Don Egan: I think it's going to be a smaller amount than that. So the infrastructure is going to continue to build out, but probably at a manageable rate. All right, great. And then just lastly, any thoughts on the first quarter impact of weather? I mean, you know, I know you guys do storm, emergency storm restoration work, but it also sometimes displays, you know, other projects you might be working on that might even just be delayed due to weather. Just, you know, wondering what your thoughts were given the well below normal temperatures we saw throughout the country. Yeah, I think to date there haven't been any big storm calls. We don't have a lot of people out on storms. We have had some geographic areas. I mean, if you look at them individually, they have had some weather impact.
Alright, Great and then just lastly.
Any thoughts on.
The first quarter.
Pack to weather.
No you guys to storm emergency storm restoration work, but it also sometimes displace.
Other <unk>.
Projects, you might be working on that might even just to get.
Delayed due to weather just wondering what your thoughts were keeping the well below normal temperatures we saw throughout the country.
Yes, I think to date, there hasnt been big Storm calls, we don't have a lot of people out on storm.
We have had some geographic areas I mean, if you look at it individually.
Richard S. Swartz: So, you know, we continue to have that, but we've had some that were better than anticipated. So I don't want you to think that the weather is bad everywhere. It's really how it affects the given projects. And I think we talked about this on calls before, you know, you can have two projects that are 50 miles apart. One has extremely bad weather, and the other one has normal weather.
Some weather impact. So we continue to have that but we've had some that are better than anticipated. So I don't want you to think that the weather is bad everywhere, it's really how does it affect a given project.
I think we've talked before on calls.
Two projects that are 50 miles apart.
One has extremely bad weather and the other one has normal weather. So it can really vary.
Richard S. Swartz: So it can really vary. But again, to date, we're not going to, we haven't seen big storm revenue yet. Okay, great. Thank you very much.
But again to date, we are not going to we haven't seen bad storm revenue.
Okay, great. Thank you very much.
Jonathan Paul Braatz: Thank you. One moment for our next question. This comes from the line of John Braatz with KCCA. Your line is now open. Good morning, everyone.
Thank you.
One moment for our next question.
This comes from the line of Jon Braatz with <unk>. Your line is now open.
Kelly Michelle Huntington: Rick, a question for you and Kelly. Obviously, the outflow is very positive, a lot of opportunities ahead. But over the last couple of years, your SG&A expenses have moderated a little bit, the growth of SG&A expenses has moderated. Do you see that continuing? Or do you think that you may have to re-accelerate some of those expenses as we go forward? Thanks.
Good morning, everyone.
Rick a question for maybe you and Kelly, obviously the fee outlook.
It was very positive a lot of opportunities ahead.
But over the last couple of years. Your your maybe your SG&A expenses have moderated a little bit the growth in SG&A.
SG&A expenses have moderated do you see that continuing or do you think that you may have to reaccelerate.
Some of those.
Some of those expenses as we go forward.
Sure.
Yes, thanks for that question.
Kelly Michelle Huntington: And, you know, if you look, we did have, I think, near-record low SG&A expenses as a percentage of revenue in the fourth quarter, and that benefited from the very strong revenues we saw in higher materials in the quarter. So I think, you know, certainly our goal is to grow our SG&A expense at a slower rate than our revenue growth. And, you know, we've been doing a good job of that the last several quarters, but I don't think I would look at the fourth quarter as the new, you know, the new assumption for that. I'd look over a little bit longer trend line of maybe 12 to 18 months because, like you said, recognizing we're growing business, so we want to make sure we're investing in our workforce, in technology, really just continuing Okay, and Kelly, one other question.
If you look we did have and I think near record low SG&A expense as a percentage of revenue in the fourth quarter and that benefited from the very strong revenue, we saw and the higher materials in the quarter.
Thank you.
Certainly our goal is to grow our SG&A expense at a slower rate than our revenue growth and we've been doing a good job of that the last several quarters, but I don't think I would look at.
Fourth quarter is that new.
The new assumption for that I'd like to have.
We're a little bit longer trend line look like maybe 12 to 18 months because like you said recognizing we're growing business that we want to make sure we're investing in our workforce and technology really just continuing to mature our capability to go after the great organic growth that's out there.
Okay, and Kelly and one other question you.
Kelly Michelle Huntington: You mentioned the higher interest costs in the quarter and higher interest rates and so on, yet at the end of the quarter, your borrowings were sharply lower than at the end of the third quarter. Did you repay some debt at year end? That might account for the lower borrowings that you're in. Yes, that's a good way to look at it. You know, we did see some stronger cash flow towards the end of the quarter that allowed us to pay down some more debt at the end of the quarter. But, you know, when we're talking about a pretty low level of debt to begin with, it doesn't take much of a fluctuation in the amount. And, you know, certainly rates year over year are quite a bit higher.
You mentioned the.
The higher interest costs in the quarter.
And higher interest rates and so on you had at the end of the court ended the quarter. Your your borrowings were sharply sharply lower than.
At the end of the third quarter did you repay some debt at year end.
And.
That might account for.
The lower lower borrowings at year end.
Sure.
Yes, that's a good way to look at it we did see stronger cash flow and towards the end of the quarter that allowed us to pay down some more data and at the ended the quarter, but.
When we're talking about a pretty low level of debt to begin with it doesn't take much of a fluctuation in the amount and certainly rate year over year are quite a bit higher so.
Kelly Michelle Huntington: So, you know, it ends up being almost, you know, a rounding error. These are pretty small numbers and, you know, something we continue to stay focused on and make sure we're driving operating cash flow and trying to keep those debt levels low in anticipation of continuing to support the business and organic growth. Okay. All right. Thank you, Kelly, www.mytrendyphone.co.uk. Okay, thank you. I'm showing no further questions at this time. I would now like to turn the call back to Rick Swartz for closing remarks. To conclude, on behalf of Kelly, Todd, Don, and myself, I sincerely thank you for joining us on the call today. I don't have anything further to say, 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. This does conclude the program. You may now disconnect. www.mytrendyphone.co.uk www.mytrendyphone.com
Got it.
It ends up being almost a rounding error at these are pretty small numbers and something we continue to stay focused on and make sure. We're driving operating cash flow and trying to keep at that level blow and anticipation of continuing to support the business and the organic growth okay.
Okay, Alright, Thank you Kelly.
Yes.
Okay. Thank you.
Im showing no further questions at this time I would now like to turn the call back to Rick Swartz for closing remarks.
To conclude on behalf of Kelly, Todd, Dan 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. This does conclude the program you may now disconnect.
Okay.
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Okay.
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