Good morning, everyone and welcome to the MYR Group First Quarter 2025 Earnings Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. [Operator Instructions] Today's conference is being recorded. At this time for opening remarks and introductions, I would like to turn the call over to Jennifer Harper, MYR Group Vice President of Investor Relations and Treasurer. Please go ahead Jennifer.

Thank you and good morning, everyone. I would like to welcome you to the MYR Group conference call to discuss the company's first quarter results for 2025, which 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; Brian Stern, Senior Vice President and Chief Operating Officer of MYR Group's Transmission & Distribution segment; and Don Egan, Senior Vice President and Chief Operating Officer of MYR Group's Commercial & Industrial segment. A copy of yesterday's press release is available on the MYR Group website at myrgroup.com under the Investors tab. A webcast replay of today's call will be available on the website for seven days following the call. 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 the forward-looking statements. Accordingly these statements are no guarantee of future performance. These risks and uncertainties are discussed in the company's annual report on Form 10-K for the year ended December 31, 2024 and the company's quarterly report on Form 10-Q for the first quarter of 2025 and in yesterday's press release. We also present certain non-GAAP financial measures. A reconciliation of these non-GAAP measures to the most comparable GAAP measures is set forth in yesterday's press release. With that, let me turn the call over to Rick Swartz.

Thanks, Jennifer. Good morning, everyone. Welcome to our first quarter 2025 conference call to discuss financial and operational results. I will begin by providing a summary of the first quarter 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, Brian Stern 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 up for your questions. We achieved solid financial results in the first quarter as we continue to expand strong customer relationships through master service and alliance agreements, perform ongoing work for our long-term customers and strategically pursue new opportunities. We remain committed to operational consistency and serving as an open and trusted partner for our customers. Bidding activity is healthy in both business segments and is reflective of the investments being made to meet the growing electrification demand. We believe our experience and proven ability to deliver safe, quality and on-time results places us in leading positions to capture this expansive work and grow our business. Remaining a strong and nimble partner, while executing projects with superior quality enables us to offer to our customers and develop future opportunities. Our financial results and performance continue to reflect a commitment to long-term growth and creating a foundation for future opportunities and success. Now Kelly will provide details on our first quarter 2025 financial results.

Thank you, Rick and good morning, everyone. Our first quarter 2025 revenues were $834 million, which represents an increase of $18 million or 2.2% compared to the same period last year. Our first quarter T&D revenues were $462 million, a decrease of 5.8% compared to the same period last year. The breakdown of T&D revenues was $270 million for transmission and $192 million for distribution. Transmission revenues decreased by $44 million primarily related to our continued selectivity on clean energy projects offset by an increase of $16 million in revenue on distribution projects. Work performed under master service agreements continued to represent approximately 60% of our T&D revenues. C&I revenues were $372 million, an increase of 14.4% compared to the same period last year, due to an increase in revenue on fixed price contracts and T&E contracts. Our gross margin was 11.6% for the first quarter of 2025 compared to 10.6% for the same period last year. The increase in gross margin was primarily due to a larger portion of our projects progressing at higher contractual margins some of which are nearing completion. Gross margin was also positively impacted by favorable change orders better-than-anticipated productivity and a favorable job closeout. These margin increases were partially offset by higher costs related to labor and project inefficiencies and unfavorable change orders. T&D operating income margin was 7.8% for the first quarter of 2025 compared to 6.1% for the same period last year. The increase was primarily due to a lower negative impact of significant changes in our estimated gross profit on certain projects primarily due to fewer labor and project inefficiencies when compared to the same period last year. C&I operating income margin was 4.7% for the first quarter of 2025 compared to 3.5% for the same period last year. The increase…

Thanks, Kelly, and good morning, everyone. Expansion of long-term relationships and winning additional work with customers across the country resulted in solid financial results for our T&D segment in the first quarter. Our project portfolio consists of healthy mix of smaller to midsized jobs and master service agreements, which continue to increase backlog. Driven by a growing demand for electricity, and the improvement needed from aging electrical infrastructure, bidding activity remains strong in the segments. The utility market continues to see opportunities such as the PJM interconnection approval of $5.9 billion in new transmission projects to bolster reliability throughout the grid operator's footprint. Also, MISO continued to add to its long-range transmission planning by approving tranche 2.1 plans of $6.7 billion in December 2024. We believe these significant investments in electrical infrastructure present many exciting opportunities for growth across our subsidiaries, who have strong existing relationships with several utility customers in the region. We will continue to monitor and strategically pursue project opportunities related to -- plans and others in the US and Canada to further strengthen our market presence. As we continue serving our long-standing customers through MSAs and alliance agreements, we were also awarded a variety of transmission, distribution and substation work across the country in the first quarter including a sizable transmission line rebuilding project in Virginia. In conclusion, we continue to evaluate, improve, and grow our T&D business. Our first quarter results reflect our ability to effectively listen to and work with our customers to meet or exceed their expectations. We will remain disciplined in our efforts to capitalize on the right opportunities and we will continue to invest in the development and safety of our talented teams. I will now turn over the call to Don Egan, who will provide an overview of our Commercial and Industrial segment.

Thanks, Brian and good morning, everyone. Our C&I segment achieved solid results in the first quarter as we continue to execute projects of various sizes and close collaboration with our valued customers, while strategically monitoring and pursuing new opportunities. Our chosen core markets remain strong and present a healthy bidding environment as we captured additional work this quarter in data centers, healthcare, industrial and clean energy, just to name a few. Recently, Sturgeon was verbally awarded Phase 1, a large-scale data center project in Colorado valued at over $90 million, which we anticipate being added to our backlog in the coming quarters. Additionally, CSI and Sturgeon were awarded water treatment projects in California and Colorado, respectively, while Sturgeon also won projects in healthcare, transportation and municipality projects. Out east, E.S. Boulos was awarded solar and industrial work in Maine, and Huen Electric won higher education, lower than municipality projects in New York. We're also pursuing exciting opportunities for sizable data center projects this year across various subsidiaries and accept some data center contracts already in place to increase due to project expansion, to meet the growing demand for artificial intelligence. The American Institute of Architects consensus construction forecast released in January projects further growth for our core markets in 2025, with positive forecast of 22% in data centers, 4% increases in both healthcare and education construction spend, and 3% in manufacturing. This growth is also reflected in the Dodge Momentum Index figures reported in recent months. The latest Dodge Momentum Index report released in April found the overall index in February was up 30% compared to the previous year, and the commercial segment was up 32% from February of 2024. In summary, we believe these encouraging forecasts in our core markets could generate growth for our business as we continue to leverage our expertise to place us in leading positions to strategically capture future opportunities. I thank all of our employees for their daily commitment to safely executing projects, and delivering exceptional quality and value to our customers. I look forward to all the important work ahead of us this year and beyond. Thanks everyone, for your time today. I will now turn the call back to Rick, who will provide us with some closing comments.

Thank you for those updates Kelly, Brian and Don. Our first quarter performance demonstrates the stability of our core markets, the strength of our operational teams and the depth of our customer relationships. We will continue our commitment to sound business strategies and strong operating principles, while remaining proactive and disciplined, in a dynamic energy landscape. I am proud of the performance across both our market segments, which is a testament to the tireless work, skill and ongoing training of our amazing employees. I thank each of them for their efforts to safely and consistently, deliver high-quality electrical construction services and generate value for our customers. We will continue to invest in the safety and development of our teams across the company, because they are the catalyst to our success. Finally, I would like to thank all of you for your continued support of MYR Group. We look forward to growing our business in 2025, serving our customers as a trusted and nimble partner and creating value for our communities and shareholders. Operator, we are now ready to open the call up for comments and questions.

Thank you. [Operator Instructions] Our first question will come from line of Atidrip Modak from Goldman Sachs. Your line is open.

Hi. Good morning team. I guess on the C&I side, revenue was strong. Margin was strong. I was just curious, how you are looking at the backlog and pipeline of opportunities there? I know you mentioned some of the end markets, but wondering about the impacts of the macro in the potential timing of the backlog and anything that you are hearing from customer conversations there would be helpful.

From our standpoint, still having very active conversations with our clients. We haven't seen anybody pull back or say they're pulling back, in any way to date, continue as I said to see an active market. And I think it, right now points positive going forward. I know there's a lot of discussions around tariffs, and we continue to have those daily with our clients of how that's going to affect their projects, how inflation is going to affect them. But to date, we haven't seen any pullback. Q – Atidrip Modak: Got it. And then maybe one for Kelly. You guys authorized and exhausted, the share repurchase this quarter. I'm just curious, how you're thinking about that for the rest of the year and just overall capital allocation priorities for this year?

Yes. I think, we continue to prioritize growth with respect to our capital allocation strategy. So that means supporting the organic growth that we see this year, as well as being in the position to make the right acquisitions. We continue to be in a strong financial position, but we're not announcing another share repurchase program at this time. But I think as you've seen in the past, we can be nimble. And as we monitor the markets and our growth prospects, we can put in a program quickly, if that makes sense. Q – Atidrip Modak: Absolutely. Thank you.

Thank you. One moment for our next question. Our next question will come from the line of Sangita Jain from KeyBanc. Your line is open.

Yes. good morning. Thank you for taking my question. Kelly, if I can ask one more on the capital allocation. Your free cash flow this quarter was considerably stronger than at least what we were anticipating. So just trying to see if there was any kind of onetime-ish in there, and how we should think about your free cash flow for the rest of the year? And more color maybe on why you wouldn't want to extend your share buyback authorization?

Sure. So on the last call we mentioned some positive leading indicators from third quarter to fourth quarter 2024. We've got an over $30 million reduction in our pending change orders and over a $40 million reduction in retainage. So that did translate to cash collections in first quarter, driving higher operating and free cash flows. I think, as we look forward as we've talked about before, there's not a good rule of thumb for free cash flow conversion for our business, particularly in the near-term. But maybe just to give some color on some of the pluses and minuses as we look forward. On the positive side, our increased profitability this year should drive positive operating cash flow. On the negative side, we are a little below our historic DSO average. So that could be a headwind especially as interest rates remain relatively high payment terms continue to be more of a focus in our contract negotiations. And as we've seen MSAs are increasing -- an increasing percentage of our revenues. So, that along with selectivity on clean energy and kind of the lumpiness of large projects can mean less opportunity to get into a really strong overbuild position like we saw back at the end of 2022. So, I'd say that at least some of the pluses and minuses we see. Rick did you want to give any more color on share repurchase. We are sensitive to how much we're deploying to that overtime.

Yes. For us, it's just a balancing act when we see the opportunities to organically grow our business we want to make sure that we can continue to do that and then we're always looking at acquisitions. So, those opportunities are out there. We just want to make sure we're patient and buying the right ones. But as Kelly said, we've shown in the past we can basically deploy our capital whether it's acquisitions, organic growth, or through share repurchase and we try to balance out on the opportunities that are out there to continue to grow our business.

That's helpful. And if I can ask one more. Rick you mentioned in your prepared comments that positive margins this quarter in T&D partly were a function of -- burning off some higher-margin projects. I just kind of want to make sure that what is coming behind that is not necessarily lower margin than theirs. So, I'm hoping what I want to see is if we can continue to see you work towards that 7% to 10.5% margin target for the year?

Yes. Yes. I think we're -- for us nothing's changed. We should be in that mid part of our margin profile. That's the way we saw it coming into this year and we still see that. So, when I look at the 7% to 10.5%, we should be in that mid-range by year-end and continue our trend from there.

All right. Appreciate it. Thanks for taking my questions.

Thank you.

Our next question will come from the line of Braatz from KCCA.

Good morning everyone.

Morning.

Rick just sort of a broad question. With the new administration and issues with the Inflation Reduction Act and maybe with the tariffs on solar product -- solar panels. Are you seeing any change in thinking from the utilities on clean energy projects at this point?

I think from a developer standpoint I mean any kind of price increase, I mean those are really financially-driven models of whether those are economically feasible to build. I think that always comes into play. So, I would say there can -- there could be some pausing on that side a little bit in a couple of geographic areas where we work and we've seen that over the last couple of quarters. But for us, we've really been selective on what we take on our T&D side. And then as I said on our C&I side that that market remains strong in the areas we're in today, so we haven't seen that pull back to-date. Again, tariffs or inflation can affect those projects. But the rest of our core business, we really haven't seen it affect our conversations there at all.

Okay. All right. Thank you. And Kelly, back to your free cash flow, it was so strong in the quarter. Would you imagine that as you go forward, you have to dip into your credit lines to -- for working capital purposes?

I would just refer back to the comments I gave in response to Sangita's question. We see some pluses and minuses but I think we're in a good financial position right now. And of course, as we look forward from a leverage perspective, the second quarter of last year where we had the bigger losses that will be rolling off as part of the calculation.

Okay. All right. Thank you, Kelly.

One moment for next question. Our next question will come from the line of Justin Hauke from Baird. Your line is open.

Great. A lot of the questions I had have already been asked. I guess the one I wanted to ask about was just kind of CapEx has been like the last couple of quarters. And I was just curious, if you've seen any shift in kind of purchasing decisions or maybe using rental assets instead of buying equipment, because ahead of tariffs and just how rapidly costs are shifting in the environment for some of the equipment to buck some things that you buy?

Yes. I think if you look at our lower capital expenditures in the first quarter that was really just due to timing and how the receipt of fleet and equipment is kind of rolling out. Historically, we've seen CapEx as a percentage of revenue average around the mid-2% level. But I'd say we continue to see that as a good benchmark going forward and that could take a little higher or lower depending on whether our growth is more weighted to T&D or C&I. But now, we haven't made any significant shifts in how we're looking at how we procure our fleet and equipment. A lot of that we purchase and we do use our rentals and leasing as well and rentals in particular kind of throttle up and down as we see demand in different markets that changing.

Okay. And then I guess my other one just from a modeling perspective. I think -- so the T&D, I guess particularly the transmission side, the pressure from the roll-off of some of those larger clean energy projects. I just wanted to kind of confirm, I think 2Q is the last, if you want to call it, a headwind from a growth perspective. And so just for thinking about revenue growth, I guess probably thinking in 2Q remains pretty modest and then we get to the second half of the year and see more of that underlying single-digit type growth that you guys have outside of that? I just want to confirm it.

Yes. I would say nothing has changed from what we said before. Right now, I would look at it as still the higher single-digit growth for the core T&D segment and overall minus solar. So when you take solar out of it, the core T&D business we expect to grow but that mid-single-digit for that -- higher single-digit with the offset of solar there though. So that is a headwind. So the solar revenue we have.

Yes. And I think that's consistent with what we saw in the quarter where if you just look at that core T&D business that was up in the high single digits year-over-year. So, in line with that.

Yes. Right. I guess I was more curious when the solar headwind if you will rolls off. I think 2Q is still pretty significant. But you got a...

Yes. So just kind of a recap of what we shared last year about solar within T&D. So as the second quarter year-to-date we have said that represented about 15% of our T&D revenues that declined to 12% as of 9/30 year-to-date last year and was down to 10% for the full year last year. And we did mention in the fourth quarter last year that it was 4% of our T&D revenues and that has further declined here in the first quarter at 25%.

Okay. All right. That's what I thought. Thank you very much.

Thank you.

Thank you. [Operator Instructions] Our next question will come from the line of Brian Brophy from Stifel. Your line is open.

Thanks. Good morning everybody. I think I heard you mentioned in your opening comments the sizable transmission award in Virginia. I guess did I heard that right? Is there any more color you can provide on that project whether it's the name or any other information? And how should we be thinking about timing and size of that project?

For us that's a midsized project. So it wasn't a large project. We kind of classified projects, large projects $100 million plus. We always try to give a little color around if the client will let us in this case the client is not letting us disclose a lot. So with that being said the project will burn through this year. It's a good project for us and we're happy to have it and we're seeing a lot of long-term opportunities beyond this year. And as I said anything, we capture on a large project size to date really wouldn't come in although we respect our backlog we wouldn't really start bearing any revenue on it until the end of the year or the beginning of next year. So anything we capture today would really be more burned in 2026 and affect our revenue then.

Okay. That's helpful. And then I wanted to also ask a question on tariffs. How should we think about that impacting your cost profile particularly on the C&I side where you guys have more fixed price contracts? And should we think about that potentially impacting your margin performance at all this year? Thanks.

It could. I don't want to say there could be no impact from it. I think it's unknown at this time. I mean the unknown side is the headlines change every 10 minutes as far as tariffs and how it could affect us and what tariffs are going to be in place. So we continue to watch it. We've got teams that are very focused on that. We're having conversations with our clients daily on that. I would say the newer contracts we have in place today have stronger language than the ones that -- some of the older ones that are in our backlog. But again we continue to monitor it right now, I would say, as we see it today we still expect to be in that mid-range of our margin profiles that we've given. But again, we're watching it closely. And if anything changes we would definitely let everyone know.

Okay. Thanks. I'll pass it on.

Thank you. And I'm not showing any further questions in the queue. I would now like to turn the call back over to Rick Swartz for any additional or closing remarks.

To conclude on behalf of Kelly, Brian, Don and myself, I sincerely thank you for joining us on the call today. I do not 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.

This concludes today's conference call. We thank you for your participation. You may now disconnect. Everyone have a great day.