MYR(US:MYRG)2022-02-23 21:11Customer Concentration and Revenue Sources - For the years ended December 31, 2021, 2020, and 2019, the top 10 customers accounted for 34.9%, 32.7%, and 30.8% of total revenues, respectively, with no single customer exceeding 10.0% of annual revenues[25]. - Revenues from T&D customers represented 52.1%, 51.4%, and 54.8% of total revenues for the years ended December 31, 2021, 2020, and 2019, while C&I customers accounted for 47.9%, 48.6%, and 45.2% respectively[26]. - The Company’s top ten customers accounted for approximately 34.9% of consolidated revenues for the year ended December 31, 2021[313]. Financial Performance - Contract revenues for 2021 were $2,498,289, representing a 11.1% increase from $2,247,392 in 2020[267]. - Gross profit rose to $324,981, a 17.8% increase compared to $275,853 in 2020[267]. - Net income attributable to MYR Group Inc. was $85,010, up 44.7% from $58,759 in 2020[267]. - Basic income per share increased to $5.05, compared to $3.52 in 2020, reflecting a 43.4% growth[267]. - Income before income taxes increased to $116.3 million in 2021 from $81.4 million in 2020, representing a 43% growth[355]. - The effective tax rate for 2021 was 26.9%, slightly down from 27.8% in 2020[357]. Backlog and Future Revenue - The company’s backlog includes projects with a written award, letter of intent, or notice to proceed, but may not accurately represent future revenue due to the nature of contract cancellations and the duration of contracts[44]. - Total backlog as of December 31, 2021, was $1,789,144, with $423,734 estimated not to be recognized within the next twelve months[45]. - The backlog for T&D was $676,130, while C&I backlog was $1,113,014 as of December 31, 2021[45]. - The company had $1.68 billion in remaining performance obligations as of December 31, 2021, with $423.7 million expected not to be recognized within the next twelve months[352][354]. - The company expects a majority of remaining performance obligations to be recognized within twenty-four months[354]. Operational Efficiency and Management - The company differentiates itself by bidding on larger and more technically complex projects, leveraging its strong operating history and local market share[41]. - The centralized fleet management group optimizes equipment utilization, which is critical for maintaining competitive equipment costs[48]. - The company’s management teams actively promote and market services for prospective large-scale projects and national accounts to pursue growth opportunities[24]. Compliance and Regulatory Environment - The company believes it is in substantial compliance with environmental laws and regulations, which should not materially affect its financial condition[52]. - The company’s operations are subject to various regulatory requirements, and failure to comply could result in project delays and fines[50]. Employee and Labor Relations - The company employed approximately 7,600 individuals as of December 31, 2021, with 92% of craft employees being union members[57]. - Approximately 92% of the Company's craft labor employees were covered by collective bargaining agreements as of December 31, 2021[315]. Assets and Liabilities - Total assets increased to $1,121,092, up 12.6% from $995,859 in 2020[264]. - Total current assets reached $748,390, an increase of 17.5% from $636,684 in 2020[264]. - Total liabilities rose to $601,990, up 6.3% from $566,567 in 2020[264]. - The company had total debt of $4.5 million as of December 31, 2021, significantly reduced from $29.4 million in 2020, indicating a decrease of 84.7%[339]. - The company had no outstanding debt under its credit facility as of December 31, 2021, with letters of credit totaling approximately $12.3 million[343]. Cash Flow and Investments - Net cash flows provided by operating activities decreased to $137,228,000 in 2021 from $175,167,000 in 2020, a decline of 21.7%[273]. - The company had net cash flows used in investing activities of $(49,299,000) in 2021, compared to $(40,926,000) in 2020, indicating a 20.0% increase in cash outflow[273]. - Cash and cash equivalents significantly increased to $82,092, compared to $22,668 in 2020, marking a 262.5% growth[264]. Stock-Based Compensation and Employee Benefits - The Company recognized stock-based compensation expense of $7,496,000 in 2021, up from $5,688,000 in 2020, marking a 31.8% increase[273]. - Total contributions to defined contribution plans for the years ended December 31, 2021, 2020, and 2019 amounted to $17.8 million, $16.8 million, and $10.9 million, respectively[385]. - The Company contributes to multiemployer defined benefit pension plans under collective-bargaining agreements, with obligations that may vary based on the plan's funding status[386]. Internal Control and Financial Reporting - The company maintained effective internal control over financial reporting as of December 31, 2021, providing reasonable assurance regarding the reliability of financial reporting[249]. - The independent registered public accounting firm audited the effectiveness of the company's internal control over financial reporting as of December 31, 2021[251]. - The company’s financial statements present fairly the financial position as of December 31, 2021, in conformity with generally accepted accounting principles[253]. Changes in Estimates and Revenue Recognition - The company recognizes revenue on fixed price construction projects over time using the cost-to-cost method, which involves significant estimates based on project conditions[260]. - Changes in estimates of variable consideration and costs to complete on in-process construction projects could significantly impact the amount of contract revenue recognized[260]. - During the year ended December 31, 2021, changes in estimates increased consolidated gross margin by 0.4%, resulting in an increase in operating income of $9.2 million and net income of $6.6 million, with diluted earnings per share of $0.39[289]. - In 2020, changes in estimates decreased consolidated gross margin by 0.8%, leading to a decrease in operating income of $18.0 million and net income of $12.8 million, with diluted earnings per share of $0.76[290].