MYR Group Inc. Announces Third-Quarter and First Nine-Months 2016 Results

ROLLING MEADOWS, Ill., Nov. 02, 2016 (GLOBE NEWSWIRE) — MYR Group Inc. (“MYR”) (NASDAQ:MYRG), a leading specialty contractor serving the electrical infrastructure market in the United States and Canada, today announced its third-quarter and first nine-months 2016 financial results.

Highlights

  • Third quarter revenues of $283.3 million, a record high quarterly revenue
  • Third quarter net income of $6.1 million, or $0.38 per share
  • Backlog increase of $145.6 million, or 30.6 percent, from the prior quarter to $620.6 million, our highest level since March 31, 2012
  • Awarded the Cross Texas Transmission contract valued at approximately $125 million
  • Third quarter common stock repurchases of $5.5 million and $20.0 million of additional repurchase capacity remains authorized
  • Acquired substantially all of the assets of Western Pacific Enterprises, an electrical contracting firm operating in western Canada, on October 28, 2016, for approximately $16.1 million CDN

Management Comments
Bill Koertner, MYR’s President and CEO, said, “Third-quarter 2016 revenue and net income improved sequentially over the first two quarters of 2016. Revenue and margins also improved year over year due mainly to organic growth and acquisitions coupled with improved project execution. We also had a sizable increase in our backlog which was driven primarily by the Cross Texas Transmission award to construct approximately 68 miles of 345kV transmission line valued at approximately $125 million. While bidding activity continued at a robust pace during the quarter, both our T&D and C&I markets remain highly competitive. Our strategic acquisition of Western Pacific Enterprises (“WPE”), was completed on October 28 and will expand our C&I and T&D capabilities in western Canada to serve new and existing customers. WPE has an exceptional reputation in its market region and is managed by an excellent management team that shares MYR’s values.”

Third-Quarter Results
MYR reported third-quarter 2016 revenues of $283.3 million, an increase of $13.4 million, or 5.0 percent, compared to the third quarter of 2015. Specifically, the T&D segment reported revenues of $206.4 million, an increase of $2.5 million, or 1.3 percent, from the third quarter of 2015, primarily due to organic and acquisitive growth, partially offset by lower revenue from large, multi-year contracts. The C&I segment reported third-quarter 2016 revenues of $76.8 million, an increase of $10.8 million, or 16.4 percent, from the third quarter of 2015, primarily due to organic growth and acquisition expansion into new markets.

Consolidated gross profit increased to $34.1 million in the third quarter of 2016, compared to $28.6 million in the third quarter of 2015. The increase in gross profit was primarily due to higher revenues and gross margin. Gross margin increased to 12.0 percent for the third quarter of 2016 from 10.6 percent for the third quarter of 2015. The quarter-over-quarter increase in gross margin was primarily due to favorable close-outs and improved performance on several projects, offset by inclement weather experienced on certain other projects. Changes in estimates of gross profit on certain projects resulted in a gross margin increase of 0.7 percent compared to a decrease of 0.5 percent for the third quarter of 2016 and 2015, respectively.

Selling, general and administrative expenses increased to $23.2 million in the third quarter of 2016 compared to $19.0 million in the third quarter of 2015 primarily due to $1.9 million of costs associated with our expansion into new geographic markets, as well as higher bonus and profit sharing costs, and increases in other payroll costs to support new and existing operations. As a percentage of revenues, selling, general and administrative expenses increased to 8.2 percent for the third quarter of 2016 from 7.0 percent for the same quarter of 2015.

For the third quarter of 2016, net income was $6.1 million, or $0.38 per diluted share, compared to $6.2 million, or $0.29 per diluted share, for the same period of 2015. Third-quarter 2016 EBITDA, a non-GAAP financial measure, was $20.5 million, or 7.2 percent of revenues, compared to $20.1 million, or 7.4 percent of revenues, in the third quarter of 2015.

First Nine-Months Results
MYR reported first nine-months 2016 revenues of $798.8 million, an increase of $8.3 million, or 1.1 percent, compared to the first nine months of 2015. Specifically, the T&D segment reported revenues of $568.0 million, a decrease of $25.7 million, or 4.3 percent, from the first nine months of 2015, primarily due to a decline in revenue from large, multi-year transmission projects partially offset by organic and acquisition growth. The C&I segment reported first nine-months 2016 revenues of $230.8 million, an increase of $34.0 million, or 17.3 percent, from the first nine months of 2015, due primarily to organic and acquisition expansion into new markets.

Consolidated gross profit increased to $92.8 million in the first nine months of 2016, compared to $89.7 million in the first nine months of 2015. The increase in gross profit was primarily due to higher revenue and gross margin. Gross margin increased to 11.6 percent for the first nine months of 2016 from 11.4 percent for the first nine months of 2015. The increase in gross margin was largely due to favorable close-outs and improved performance on several projects. This was partially offset by lower bid margins caused by increased competition in many of our markets and an increase in shorter duration projects (which can affect labor productivity, fleet utilization, mobilization costs and demobilization costs) and write-downs due to unrecognized, pending change orders and a project claim, inclement weather and lower productivity experienced on certain projects. Changes in estimates of gross profit on certain projects resulted in a gross margin decrease of 0.5 percent and an increase of 0.5 percent for the first nine months of 2016 and 2015, respectively.

Selling, general and administrative expenses increased to $69.6 million in the first nine months of 2016 compared to $56.5 million in the first nine months of 2015. The increase in selling, general and administrative expenses in the first nine months of 2016 was primarily due to $7.2 million of costs associated with our expansion into new geographic markets, $1.0 million associated with activist investor activities, increased bonus costs and higher payroll costs to support operations. As a percentage of revenues, selling, general and administrative expenses increased to 8.7 percent for the first nine months of 2016 from 7.2 percent for the first nine months of 2015.

For the first nine months of 2016, net income was $13.6 million, or $0.77 per diluted share, compared to $21.4 million, or $1.01 per diluted share, for the same period of 2015. First nine-months 2016 EBITDA, a non-GAAP financial measure, was $52.7 million, or 6.6 percent of revenues, compared to $62.9 million, or 8.0 percent of revenues, in the first nine months of 2015.

Share Repurchase Program
In the 2016 third quarter, MYR purchased 224,189 shares of its common stock for $5.5 million, resulting in repurchases of 4.2 million shares, for $99.8 million, during the first nine months of 2016, under the share repurchase program (“Repurchase Program”). Since the inception of our Repurchase Program, MYR has purchased a total of 6,024,978 shares of our common stock for $142.5 million at an average share price of $23.64 per share. As of September 30, 2016, we had $20.0 million of remaining availability to purchase shares of our common stock under the Repurchase Program.

Backlog
As of September 30, 2016, MYR’s backlog was $620.6 million, consisting of $436.9 million in the T&D segment and $183.7 million in the C&I segment. Total backlog of $620.6 million was $145.6 million higher than the $475.0 million reported as of June 30, 2016. Our backlog total has increased in nine of the past eleven quarters and, as of September 30, 2016, was at its highest level since March 31, 2012. T&D backlog increased $132.3 million, or 43.4 percent, from June 30, 2016, while C&I backlog increased $13.3 million, or 7.8 percent, over the same period. Total backlog at September 30, 2016 increased $195.5 million, or 46.0 percent, from the $425.1 million reported at September 30, 2015.

Balance Sheet
As of September 30, 2016, MYR had $192.3 million of borrowing availability under its credit facility.

Subsequent Event
On October 28, 2016, MYR Group completed the acquisition of substantially all of the assets of Western Pacific Enterprises GP and of Western Pacific Enterprises Ltd., except for certain real estate owned by Western Pacific Enterprises Ltd., which conducted business as Western Pacific Enterprises GP (“WPE”), an electrical contracting firm in western Canada. Headquartered in Coquitlam, British Columbia, WPE will provide a wide range of commercial and industrial electrical construction capabilities under the Company’s C&I segment. WPE will also provide substation construction capabilities under MYR’s T&D segment. The total consideration paid was approximately $16.1 million CDN, subject to working capital adjustments, which was funded through borrowings on the Company’s 2016 Facility. MYR Group does not expect WPE’s revenues or profits to be material to the Company’s 2016 operating results. Approximately $0.1 million of acquisition-related costs associated with this acquisition were expensed by the Company in the nine months ended September 30, 2016.

Non-GAAP Financial Measures
To supplement MYR’s financial statements presented in accordance with generally accepted accounting principles in the United States (GAAP), MYR uses certain non-GAAP measures. Reconciliation to the nearest GAAP measures of all non-GAAP measures included in this press release can be found at the end of this release. MYR’s definitions of these non-GAAP measures may differ from similarly titled measures used by others. These non-GAAP measures should be considered supplemental to, and not a substitute for, financial information prepared in accordance with GAAP.

MYR believes that these non-GAAP measures are useful because they (i) provide both management and investors meaningful supplemental information regarding financial performance by excluding certain expenses and benefits that may not be indicative of recurring core business operating results, (ii) permit investors to view MYR’s performance using the same tools that management uses to evaluate MYR’s past performance, reportable business segments and prospects for future performance, (iii) publicly disclose results that are relevant to financial covenants included in MYR’s credit facility and (iv) otherwise provide supplemental information that may be useful to investors in evaluating MYR.

Conference Call
MYR will host a conference call to discuss its third-quarter 2016 results on Thursday, November 3, 2016, at 9:30 a.m. Central time. To participate in the conference call via telephone, please dial (877) 561-2750 (domestic) or (763) 416-8565 (international) at least five minutes prior to the start of the event. A replay of the conference call will be available through Wednesday, November 9, 2016, at 11:59 p.m. Eastern time, by dialing (855) 859-2056 or (404) 537-3406, and entering conference ID 98416360. MYR will also broadcast the conference call live via the internet. Interested parties may access the webcast through the Investor Relations section of MYR’s website at www.myrgroup.com. Please access the website at least 15 minutes prior to the start of the call to register, download and install any necessary audio software. The webcast will be available until Wednesday, November 9, 2016, at 11:59 P.M. Eastern time.

About MYR
MYR is a leading specialty contractor serving the electrical infrastructure market throughout the United States and Canada, has the experience and expertise to complete electrical installations of any type and size. MYR’s comprehensive services on electric transmission and distribution networks and substation facilities include design, engineering, procurement, construction, upgrade, maintenance and repair services. MYR’s transmission and distribution customers include investor-owned utilities, cooperatives, private developers, government-funded utilities, independent power producers, independent transmission companies, industrial facility owners and other contractors. MYR also provides commercial and industrial electrical contracting services to general contractors, commercial and industrial facility owners, local governments and developers generally throughout the western and northeastern United States and western Canada. For more information, visit myrgroup.com.

Forward-Looking Statements
Various statements in this announcement, including those that express a belief, expectation, or intention, as well as those that are not statements of historical fact, are forward-looking statements. The forward-looking statements may include projections and estimates concerning the timing and success of specific projects and our future production, revenue, income, capital spending, segment improvements and investments. Forward-looking statements are generally accompanied by words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “objective,” “outlook,” “plan,” “project,” “likely,” “unlikely,” “possible,” “potential,” “should” or other words that convey the uncertainty of future events or outcomes. The forward-looking statements in this announcement speak only as of the date of this announcement; we disclaim any obligation to update these statements (unless required by securities laws), and we caution you not to rely on them unduly. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. No forward-looking statement can be guaranteed and actual results may differ materially from those projected. Forward-looking statements in this announcement should be evaluated together with the many uncertainties that affect MYR’s business, particularly those mentioned in the risk factors and cautionary statements in Item 1A of MYR’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015, and in any risk factors or cautionary statements contained in MYR’s subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K.

Financial tables follow…

MYR GROUP INC.
Consolidated Balance Sheets
As of September 30, 2016 and December 31, 2015
 
  September 30,   December 31,
(In thousands, except share and per share data)    2016       2015  
  (unaudited)    
ASSETS      
Current assets:      
Cash and cash equivalents $   584     $   39,797  
Accounts receivable, net of allowances of $362 and $376, respectively     185,454         187,235  
Costs and estimated earnings in excess of billings on uncompleted contracts     80,305         51,486  
Receivable for insurance claims in excess of deductibles     12,930         11,290  
Refundable income taxes     1,296         5,617  
Other current assets     5,383         7,942  
Total current assets     285,952         303,367  
Property and equipment, net of accumulated depreciation of $203,786 and $181,575, respectively     153,009         160,678  
Goodwill     46,781         47,124  
Intangible assets, net of accumulated amortization of $4,489 and $3,798, respectively     11,017         11,362  
Other assets     2,850         2,394  
Total assets $   499,609     $   524,925  
       
LIABILITIES AND STOCKHOLDERS’ EQUITY      
Current liabilities:      
       
Current maturities of long-term debt, including capital leases $   1,062      $    
Accounts payable     85,867         73,300  
Billings in excess of costs and estimated earnings on uncompleted contracts     46,052         40,614  
Accrued self insurance     37,267         36,967  
Other current liabilities     28,101         28,856  
Total current liabilities     198,349         179,737  
Deferred income tax liabilities     14,242         14,382  
Long-term debt, including capital leases, net of current maturities     37,500        
Other liabilities     845         926  
Total liabilities     250,936         195,045  
Commitments and contingencies              
Stockholders’ equity:              
Preferred stock—$0.01 par value per share; 4,000,000 authorized shares;              
none issued and outstanding at September 30, 2016 and December 31, 2015          
Common stock—$0.01 par value per share; 100,000,000 authorized shares;              
16,064,682 and 19,969,347 shares issued and outstanding at September 30, 2016 and December 31, 2015, respectively     158         198  
Additional paid-in capital     132,917         161,342  
Accumulated other comprehensive income     51         116  
Retained earnings     115,547         168,224  
Total stockholders’ equity     248,673         329,880  
Total liabilities and stockholders’ equity $   499,609     $   524,925  

MYR GROUP INC.
Unaudited Consolidated Statements of Operations and Comprehensive Income (Loss)
Three and Nine Months Ended September 30, 2016 and 2015
 
  Three months ended   Nine months ended
 September 30,    September 30,
(In thousands, except per share data)   2016       2015       2016       2015  
               
Contract revenues $   283,259     $   269,861     $   798,827     $   790,497  
Contract costs     249,196         241,241         706,048         700,767  
Gross profit     34,063         28,620         92,779         89,730  
Selling, general and administrative expenses     23,203         18,974         69,579         56,513  
Amortization of intangible assets     188         84         691         251  
Gain on sale of property and equipment     (467 )       (357 )       (1,079 )       (1,574 )
Income from operations     11,139         9,919         23,588         34,540  
Other income (expense)              
Interest income           8         5         23  
Interest expense     (408 )       (180 )       (833 )       (546 )
Other, net     (417 )       438         (361 )       349  
Income before provision for income taxes     10,314         10,185         22,399         34,366  
Income tax expense     4,168         4,010         8,766         12,945  
Net income $   6,146     $   6,175     $   13,633     $   21,421  
Income per common share:              
—Basic $   0.39     $   0.30     $   0.78     $   1.03  
—Diluted $   0.38     $   0.29     $   0.77     $   1.01  
Weighted average number of common shares and potential common shares outstanding:              
—Basic     15,805         20,788         17,489         20,662  
—Diluted     16,177         21,214         17,817         21,113  
               
Net income $   6,146     $   6,175     $   13,633     $   21,421  
Other comprehensive income (loss):              
Foreign currency translation adjustment     19         50         (65 )       69  
Other comprehensive income (loss)     19         50         (65 )       69  
Total comprehensive income $   6,165     $   6,225     $   13,568     $   21,490  

MYR GROUP INC.
Unaudited Consolidated Statements of Cash Flows
Nine Months Ended September 30, 2016 and 2015
 
  Nine months ended
 September 30,
(In thousands)    2016        2015  
       
Cash flows from operating activities:      
Net income $   13,633     $   21,421  
Adjustments to reconcile net income to net cash flows provided by operating activities —      
Depreciation and amortization of property and equipment     28,747         27,767  
Amortization of intangible assets     691         251  
Stock-based compensation expense     3,488         3,843  
Deferred income taxes     (116 )       (186 )
Gain on sale of property and equipment     (1,079 )       (1,574 )
Other non-cash items     (38 )       175  
Changes in operating assets and liabilities      
Accounts receivable, net     1,770         (24,301 )
Costs and estimated earnings in excess of billings on      
uncompleted contracts     (28,774 )       (31,319 )
Receivable for insurance claims in excess of deductibles     (1,640 )       920  
Other assets     7,008         (1,234 )
Accounts payable     11,022         17,014  
Billings in excess of costs and estimated earnings on      
uncompleted contracts     5,454         6,079  
Accrued self insurance     299         (3,387 )
Other liabilities     32         (4,774 )
Net cash flows provided by operating activities     40,497         10,695  
Cash flows from investing activities:              
Proceeds from sale of property and equipment     2,544         1,980  
Cash paid for acquired business           (11,374 )
Purchases of property and equipment     (17,948 )       (42,795 )
Net cash flows used in investing activities     (15,404 )       (52,189 )
Cash flows from financing activities:              
Net borrowings under revolving lines of credit     33,407        
Payment of principal obligations under capital leases     (442 )      
Increase in outstanding checks     2,540        
Proceeds from exercise of stock options     2,080         1,823  
Debt issuance costs     (1,006 )      
Excess tax benefit from stock-based awards     480         1,676  
Repurchase of common shares     (101,483 )       (9,240 )
Other financing activities     63         28  
Net cash flows used in financing activities     (64,361 )       (5,713 )
Effect of exchange rate changes on cash     55        
Net decrease in cash and cash equivalents     (39,213 )       (47,207 )
Cash and cash equivalents:      
Beginning of period     39,797         77,636  
End of period $   584     $   30,429  
       
Supplemental cash flow information:      
       
Noncash investing activities:      
Acquisition of property and equipment acquired under capital lease arrangements $   5,580     $  
           
Noncash financing activities:          
Capital lease obligations initiated $   5,580     $  

MYR GROUP INC.
Unaudited Consolidated Selected Data and Net Income Per Share
Three and Twelve Months Ended September 30, 2016 and 2015
 
              Three months ended   Last twelve months ended  
               September 30,    September 30,  
(in thousands, except shares and per share data)    2016        2015        2016        2015    
                             
Summary Statement of Operations Data:                  
Contract revenues   $   283,259     $   269,861     $   1,070,011     $   1,041,476    
Gross profit   $   34,063     $   28,620     $   125,390     $   131,812    
Income from operations   $   11,139     $   9,919     $   33,889     $   57,010    
Income before provision for income taxes   $   10,314     $   10,185     $   32,332     $   56,662    
Income Tax Expense   $    4,168     $   4,010     $   12,818     $   21,114    
Net income   $   6,146     $   6,175     $   19,514     $   35,548    
Effective Tax Rate     40.4 %     39.4 %     39.6 %     37.3 %  
                             
Per Share Data:                  
Income per common share:                  
 – Basic   $   0.39     $   0.30     $   1.10     (1 ) $   1.72     (1 )
 – Diluted         $   0.38     $   0.29     $   1.08     (1 ) $   1.68     (1 )
Weighted average number of common shares                
 and potential common shares outstanding :
                 
 – Basic       15,805         20,788         18,171     (2 )     20,670     (2 )
 – Diluted       16,177         21,214         18,518     (2 )     21,159     (2 )
                             
               September 30,    December 31,    September 30,    September 30,  
(in thousands)      2016       2015       2015       2014    
                             
Summary Balance Sheet Data:                  
Total assets   $ 499,609     $ 524,925     $ 559,706         $ 528,699    
Total stockholders’ equity (book value)   $ 248,673     $ 329,880     $ 341,254         $ 311,311    
Goodwill and intangible assets   $ 57,798     $ 58,486     $ 58,281         $ 56,548    
Total debt    $ 38,562     $     $         $    
                             
                      Last twelve months ended  
                       September 30,  
                         2016        2015    
Financial Performance Measures (3):                  
Reconciliation of Non-GAAP measures:                          
Net income           $   19,514     $   35,548    
Interest expense, net               1,021         695    
Tax impact of interest                       (404 )       (259 )  
EBIT, net of taxes (4)           $   20,131     $   35,984    
                           
See notes at the end of this earnings release. 

 

 
MYR GROUP INC.
Unaudited Performance Measures and Reconciliation of Non-GAAP Measures
Three and Twelve Months Ended September 30, 2016 and 2015
 
              Three months ended   Last twelve months ended
               September 30,    September 30,
(in thousands, except shares, per share data, ratios and percentages)    2016        2015        2016        2015  
                           
Financial Performance Measures (3):                
EBITDA (5)   $   20,470     $   20,056     $   72,802     $   93,997  
EBITDA per Diluted Share (6)   $   1.27     $   0.95     $   3.93     $   4.44  
Free Cash Flow (7)   $   (11,676 )   $   (11,398 )   $   51,050     $   (13,801 )
Book Value per Period End Share (8)   $   15.13     $   16.07          
Tangible Book Value (9)   $   190,875     $   282,973          
Tangible Book Value per Period End Share (10) $   11.61     $   13.33          
Debt to Equity Ratio  (11)     0.2       0.0          
Asset Turnover (12)             1.91       1.97  
Return on Assets (13)             3.5 %     6.7 %
Return on Equity  (14)             5.7 %     11.4 %
Return on Invested Capital (17)             6.5 %     14.6 %
                           
Reconciliation of Non-GAAP Measures:                
Reconciliation of Net Income to EBITDA:                
Net income   $   6,146     $   6,175     $   19,514     $   35,548  
  Interest expense, net       408         172         1,021         695  
  Provision for income taxes       4,168         4,010         12,818         21,114  
  Depreciation and amortization       9,748         9,699         39,449         36,640  
EBITDA (5)   $   20,470     $   20,056     $   72,802     $   93,997  
                           
Reconciliation of Net Income per Diluted Share              
    to EBITDA per Diluted Share:                
Net Income per share:   $   0.38     $   0.29     $   1.08     $   1.68  
  Interest expense, net, per share       0.03         0.01         0.05         0.03  
  Provision for income taxes per share       0.26         0.19         0.68         1.00  
  Depreciation and amortization per share       0.60         0.46         2.12         1.73  
EBITDA per Diluted Share (6)   $   1.27     $   0.95     $   3.93     $   4.44  
                           
Calculation of Free Cash Flow:                
Net cash flow from operating activities   $   (5,965 )   $   1,666     $   72,802     $   32,047  
  Less: cash used in purchasing property and equipment     (5,711 )       (13,064 )       (21,752 )       (45,848 )
Free Cash Flow (7)   $   (11,676 )   $   (11,398 )   $   51,050     $   (13,801 )
                           
Reconciliation of Book Value to Tangible Book Value:              
Book value (total stockholders’ equity)   $   248,673     $   341,254          
  Goodwill and intangible assets       (57,798 )       (58,281 )        
Tangible Book Value (9)   $   190,875     $   282,973          
                           
Reconciliation of Book Value per Period End Share               
    to Tangible Book Value per Period End Share:              
Book value per period end share:   $   15.13     $   16.07          
  Goodwill and intangible assets per period end share   (3.52 )     (2.74 )        
Tangible Book Value per Period End Share (10) $   11.61     $   13.33          
                           
Calculation of Period End Shares:                
Shares Outstanding       16,065         20,805          
  Plus: Common Equivalents       372         426          
Period End Shares (15)       16,437         21,231          
                           
                   September 30,    September 30,    September 30,
                    2016       2015       2014  
Reconciliation of Invested Capital to Shareholders Equity:              
Book value (total stockholders’ equity)       $   248,673     $   341,254     $   311,311  
    Plus: Total Debt           38,562              
    Less: Cash and cash equivalents           (584 )       (30,429 )       (64,609 )
Invested Capital (16)       $   286,651     $   310,825     $   246,702  
 
See notes at the end of this earnings release.

(1) Last-twelve-months earnings per share is the sum of earnings per share reported in the last four quarters.
(2) Last-twelve-months average basic and diluted shares were determined by adding the average shares reported for the last four quarters and dividing by four.
(3) These financial performance measures are provided as supplemental information to the financial statements. These measures are used by management to evaluate our past performance and prospects for future performance, to evaluating our ability to comply with certain material covenants as defined within our credit agreement and to compare our results with those of our peers. In addition, we believe that certain of the measures, such as book value, tangible book value, free cash flow, asset turnover, return on equity and debt leverage are measures that are monitored by sureties, lenders, lessors, suppliers and certain investors. Our calculation of each measure is described in the following notes; our calculation may not be the same as the calculations made by other companies.
(4) EBIT, net of taxes is defined as net income plus net interest, less the tax impact of net interest. The tax impact of net interest is computed by multiplying net interest by the effective tax rate. Management uses EBIT, net of taxes, to measure our results exclusive of the impact of financing costs.
(5) EBITDA is defined as earnings before interest, taxes, depreciation and amortization.  EBITDA is not recognized under GAAP and does not purport to be an alternative to net income as a measure of operating performance or to net cash flows provided by operating activities as a measure of liquidity. EBITDA is a component of the debt to EBITDA covenant, as defined in our credit agreement, which we must report to our bank on a quarterly basis. In addition, management considers EBITDA a useful measure because it eliminates differences which are caused by different capital structures as well as different tax rates and depreciation schedules when comparing our measures to our peers’ measures.
(6) EBITDA per share is calculated by dividing EBITDA by the weighted average number of diluted shares outstanding for the period. EBITDA per diluted share is not recognized under GAAP and does not purport to be an alternative to income per diluted share.
(7) Free cash flow, which is defined as cash flow provided by operating activities minus cash flow used in purchasing property and equipment, is not recognized under GAAP and does not purport to be an alternative to net income, cash flow from operations or the change in cash on the balance sheet. Management views free cash flow as a measure of operational performance, liquidity and financial health. 
(8) Book value per period end share is calculated by dividing total stockholders’ equity at the end of the period by the period end shares outstanding.
(9) Tangible book value is calculated by subtracting goodwill and intangible assets outstanding at the end of the period from stockholders’ equity outstanding at the end of the period. Tangible book value is not recognized under GAAP and does not purport to be an alternative to book value or stockholders’ equity.
(10) Tangible book value per period end share is calculated by dividing tangible book value at the end of the period by the period end number of shares outstanding. Tangible book value per period end share is not recognized under GAAP and does not purport to be an alternative to income per diluted share.
(11) The debt to equity ratio is calculated by dividing total debt at the end of the period by total stockholders’ equity at the end of the period.
(12) Asset turnover is calculated by dividing the current period revenue by total assets at the beginning of the period.
(13) Return on assets is calculated by dividing net income for the period by total assets at the beginning of the period.
(14) Return on equity is calculated by dividing net income for the period by total stockholders’ equity at the beginning of the period.
(15) Period end shares is calculated by adding average common stock equivalents for the quarter to period end balance of common stock outstanding. Period end shares is not recognized under GAAP and does not purport to be an alternative to diluted shares. Management views period end shares as a better measure of shares outstanding as of the end of the period.
(16) Invested capital is calculated by adding net debt (total debt less cash and marketable securities) to total stockholders’ equity.
(17) Return on invested capital is calculated by dividing EBIT, net of taxes, less any dividends, by invested capital at the beginning of the period. Return on invested capital is not recognized under GAAP, and is a key metric used by management to determine our executive compensation.

CONTACT: MYR Group Inc. Contact:
Betty R. Johnson, Chief Financial Officer, 847-290-1891, investorinfo@myrgroup.com

Investor Contact: 
Kristine Walczak
Dresner Corporate Services, 312-780-7240, kwalczak@dresnerco.com