UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June 30, 2022~~March 31, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 1-08325

MYR GROUP INC.

(Exact name of registrant as specified in its charter)

Delaware

36-3158643

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer Identification No.)

~~12150 East 112th Avenue~~12121 Grant Street,

Suite 610

~~Henderson,~~Thornton,

~~80640~~80241

(Address of principal executive offices)

(Zip Code)

(303) 286-8000

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	MYRG	The Nasdaq Stock Market, LLC
		(Nasdaq Global Market)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

As of ~~July 22, 2022,~~April 21, 2023, there were ~~16,656,698~~16,708,109 outstanding shares of the registrant’s $0.01 par value common stock.

Table of Contents

INDEX


		Page
	Part I—Financial Information
Item 1.	Financial Statements	2
	Consolidated Balance Sheets as of ~~June 30, 2022~~March 31, 2023 (unaudited) and December 31, ~~2021~~2022	2
	Unaudited Consolidated Statements of Operations and Comprehensive Income for the Three ~~and Six~~ Months Ended ~~June 30, 2022~~March 31, 2023 and ~~2021~~2022	3
	Unaudited Consolidated Statements of ~~Stockholders’~~Shareholders’ Equity for the Three ~~and Six~~ Months Ended ~~June 30, 2022~~March 31, 2023 and ~~2021~~2022	4
	Unaudited Consolidated Statements of Cash Flows for the ~~Six~~Three Months Ended ~~June 30, 2022~~March 31, 2023 and ~~2021~~2022	5
	Notes to Unaudited Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2220
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3531
Item 4.	Controls and Procedures	3531
	Part II—Other Information
Item 1.	Legal Proceedings	3632
Item 1A.	Risk Factors	3632
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3632
Item 6.	Exhibits	3733

Throughout this report, references to “MYR Group,” the “Company,” “we,” “us” and “our” refer to MYR Group Inc. and its consolidated subsidiaries, except as otherwise indicated or as the context otherwise requires.

Table of Contents

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

MYR GROUP INC.

CONSOLIDATED BALANCE SHEETS


(in thousands, except share and per share data)	(in thousands, except share and per share data)	June 30, 2022		December 31, 2021		(in thousands, except share and per share data)	March 31, 2023		December 31, 2022
		(unaudited)					(unaudited)
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	22,057	$	82,092	Cash and cash equivalents	$	47,039	$	51,040
Accounts receivable, net of allowances of $2,337 and $2,441, respectively		409,497		375,353
Contract assets, net of allowances of $452 and $385, respectively		280,718		225,075
Accounts receivable, net of allowances of $2,008 and $2,073, respectively						Accounts receivable, net of allowances of $2,008 and $2,073, respectively	418,762		472,543
Contract assets, net of allowances of $520 and $499, respectively						Contract assets, net of allowances of $520 and $499, respectively	332,516		300,615
Current portion of receivable for insurance claims in excess of deductibles	Current portion of receivable for insurance claims in excess of deductibles	9,755		11,078		Current portion of receivable for insurance claims in excess of deductibles	9,408		9,325
Refundable income taxes	Refundable income taxes	9,650		9,228		Refundable income taxes	6,016		8,944
Prepaid expenses and other current assets	Prepaid expenses and other current assets	52,733		45,564		Prepaid expenses and other current assets	34,601		47,824
Total current assets	Total current assets	784,410		748,390		Total current assets	848,342		890,291
Property and equipment, net of accumulated depreciation of $336,347 and $322,128, respectively		212,055		196,092
Property and equipment, net of accumulated depreciation of $356,613 and $351,753, respectively						Property and equipment, net of accumulated depreciation of $356,613 and $351,753, respectively	237,835		233,175
Operating lease right-of-use assets	Operating lease right-of-use assets	32,675		20,971		Operating lease right-of-use assets	29,437		30,544
Goodwill	Goodwill	108,405		66,065		Goodwill	115,913		115,847
Intangible assets, net of accumulated amortization of $22,729 and $16,779, respectively		98,746		49,054
Intangible assets, net of accumulated amortization of $26,673 and $25,439, respectively						Intangible assets, net of accumulated amortization of $26,673 and $25,439, respectively	86,386		87,557
Receivable for insurance claims in excess of deductibles	Receivable for insurance claims in excess of deductibles	21,262		32,443		Receivable for insurance claims in excess of deductibles	34,728		34,210
Investment in joint ventures	Investment in joint ventures	3,155		3,978		Investment in joint ventures	4,153		3,697
Other assets	Other assets	3,661		4,099		Other assets	3,443		3,537
Total assets	Total assets	$	1,264,369	$	1,121,092	Total assets	$	1,360,237	$	1,398,858

LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES AND SHAREHOLDERS’ EQUITY						LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Current portion of long-term debt	Current portion of long-term debt	$	1,065	$	1,039	Current portion of long-term debt	$	5,160	$	5,074
Current portion of operating lease obligations	Current portion of operating lease obligations	9,405		7,765		Current portion of operating lease obligations	10,010		9,711
Current portion of finance lease obligations	Current portion of finance lease obligations	1,318		—		Current portion of finance lease obligations	1,105		1,127
Accounts payable	Accounts payable	251,646		200,744		Accounts payable	294,310		315,323
Contract liabilities	Contract liabilities	203,163		167,931		Contract liabilities	220,754		227,055
Current portion of accrued self-insurance	Current portion of accrued self-insurance	23,526		24,242		Current portion of accrued self-insurance	25,043		28,752
Accrued income taxes		2,669		2,021

Other current liabilities	Other current liabilities	72,614		94,857		Other current liabilities	68,463		79,918
Total current liabilities	Total current liabilities	565,406		498,599		Total current liabilities	624,845		666,960
Deferred income tax liabilities	Deferred income tax liabilities	24,613		24,620		Deferred income tax liabilities	45,797		45,775
Long-term debt	Long-term debt	54,381		3,464		Long-term debt	20,498		35,479
Accrued self-insurance	Accrued self-insurance	39,666		50,816		Accrued self-insurance	52,435		51,287
Operating lease obligations, net of current maturities	Operating lease obligations, net of current maturities	23,272		13,230		Operating lease obligations, net of current maturities	19,435		20,845
Finance lease obligations, net of current maturities	Finance lease obligations, net of current maturities	3,026		—		Finance lease obligations, net of current maturities	2,039		2,313
Other liabilities	Other liabilities	22,923		11,261		Other liabilities	17,623		15,999
Total liabilities	Total liabilities	733,287		601,990		Total liabilities	782,672		838,658
Commitments and contingencies	Commitments and contingencies	0		0		Commitments and contingencies
Stockholders’ equity:
Preferred stock—$0.01 par value per share; 4,000,000 authorized shares; none issued and outstanding at June 30, 2022 and December 31, 2021		—		—
Common stock—$0.01 par value per share; 100,000,000 authorized shares; 16,723,583 and 16,870,636 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively		167		168
Shareholders’ equity:						Shareholders’ equity:
Preferred stock—$0.01 par value per share; 4,000,000 authorized shares; none issued and outstanding at March 31, 2023 and December 31, 2022						Preferred stock—$0.01 par value per share; 4,000,000 authorized shares; none issued and outstanding at March 31, 2023 and December 31, 2022	—		—
Common stock—$0.01 par value per share; 100,000,000 authorized shares; 16,699,201 and 16,563,767 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively						Common stock—$0.01 par value per share; 100,000,000 authorized shares; 16,699,201 and 16,563,767 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively	167		165
Additional paid-in capital	Additional paid-in capital	158,691		163,754		Additional paid-in capital	156,233		161,427
Accumulated other comprehensive income (loss)		(1,653)		173
Accumulated other comprehensive loss						Accumulated other comprehensive loss	(6,164)		(6,300)
Retained earnings	Retained earnings	373,877		355,007		Retained earnings	427,329		404,908

Total stockholders’ equity		531,082		519,102
Total liabilities and stockholders’ equity		$	1,264,369	$	1,121,092
Total shareholders’ equity						Total shareholders’ equity	577,565		560,200
Total liabilities and shareholders’ equity						Total liabilities and shareholders’ equity	$	1,360,237	$	1,398,858

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

MYR GROUP INC.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME


		Three months ended June 30,				Six months ended June 30,					Three months ended March 31,
(in thousands, except per share data)	(in thousands, except per share data)	2022		2021		2022		2021		(in thousands, except per share data)	2023		2022
Contract revenues	Contract revenues	$	708,114	$	649,573	$	1,344,738	$	1,242,059	Contract revenues	$	811,616	$	636,624
Contract costs	Contract costs	627,252		568,551		1,183,391		1,084,084		Contract costs	727,224		556,139
Gross profit	Gross profit	80,862		81,022		161,347		157,975		Gross profit	84,392		80,485
Selling, general and administrative expenses	Selling, general and administrative expenses	52,016		51,890		105,580		101,537		Selling, general and administrative expenses	56,964		53,564
Amortization of intangible assets	Amortization of intangible assets	3,253		578		6,020		1,156		Amortization of intangible assets	1,226		2,767
Gain on sale of property and equipment	Gain on sale of property and equipment	(652)		(1,111)		(1,400)		(1,794)		Gain on sale of property and equipment	(1,224)		(748)
Income from operations	Income from operations	26,245		29,665		51,147		57,076		Income from operations	27,426		24,902
Other income (expense):	Other income (expense):									Other income (expense):
Interest income	Interest income	6		15		14		28		Interest income	321		8
Interest expense	Interest expense	(650)		(678)		(1,101)		(1,153)		Interest expense	(586)		(451)
Other income, net		2,277		80		2,262		121
Other expense, net										Other expense, net	(90)		(15)
Income before provision for income taxes	Income before provision for income taxes	27,878		29,082		52,322		56,072		Income before provision for income taxes	27,071		24,444
Income tax expense	Income tax expense	8,194		7,863		11,950		14,925		Income tax expense	3,908		3,756
Net income	Net income	$	19,684	$	21,219	$	40,372	$	41,147	Net income	$	23,163	$	20,688

Income per common share:	Income per common share:									Income per common share:
—Basic	—Basic	$	1.17	$	1.26	$	2.39	$	2.45	—Basic	$	1.39	$	1.22
—Diluted	—Diluted	$	1.15	$	1.24	$	2.36	$	2.41	—Diluted	$	1.38	$	1.21
Weighted average number of common shares and potential common shares outstanding:	Weighted average number of common shares and potential common shares outstanding:									Weighted average number of common shares and potential common shares outstanding:
—Basic	—Basic	16,894		16,854		16,904		16,807		—Basic	16,618		16,916
—Diluted	—Diluted	17,070		17,125		17,141		17,093		—Diluted	16,824		17,133

Net income	Net income	$	19,684	$	21,219	$	40,372	$	41,147	Net income	$	23,163	$	20,688
Other comprehensive income (loss):
Other comprehensive income:										Other comprehensive income:
Foreign currency translation adjustment	Foreign currency translation adjustment	(3,477)		413		(1,826)		666		Foreign currency translation adjustment	136		1,651
Other comprehensive income (loss)		(3,477)		413		(1,826)		666
Other comprehensive income										Other comprehensive income	136		1,651
Total comprehensive income	Total comprehensive income	$	16,207	$	21,632	$	38,546	$	41,813	Total comprehensive income	$	23,299	$	22,339

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

MYR GROUP INC.

UNAUDITED CONSOLIDATED STATEMENTS OF ~~STOCKHOLDERS’~~SHAREHOLDERS’ EQUITY


		Preferred		Common Stock			Additional Paid-In		Accumulated Other Comprehensive		Retained		MYR Group Inc. Stockholders’		Noncontrolling					Preferred		Common Stock			Additional Paid-In		Accumulated Other Comprehensive		Retained
(in thousands)	(in thousands)	Stock		Shares	Amount		Capital		Income (Loss)		Earnings		Equity		Interest		Total		(in thousands)	Stock		Shares	Amount		Capital		Income (Loss)		Earnings		Total
Balance at December 31, 2020		$	—	16,734	$	167	$	158,618	$	23	$	270,480	$	429,288	$	4	$	429,292
Balance at December 31, 2021																			Balance at December 31, 2021	$	—	16,871	$	168	$	163,754	$	173	$	355,007	$	519,102
Net income	Net income	—		—	—		—		—		19,928		19,928		—		19,928		Net income	—		—	—		—		—		20,688		20,688

Stock issued under compensation plans, net	Stock issued under compensation plans, net	—		123	1		109		—		—		110		—		110		Stock issued under compensation plans, net	—		193	2		2		—		—		4
Stock-based compensation expense	Stock-based compensation expense	—		—	—		1,487		—		—		1,487		—		1,487		Stock-based compensation expense	—		—	—		1,624		—		—		1,624
Shares repurchased related to tax withholding for stock-based compensation	Shares repurchased related to tax withholding for stock-based compensation	—		(41)	—		(2,231)		—		(387)		(2,618)		—		(2,618)		Shares repurchased related to tax withholding for stock-based compensation	—		(69)	—		(6,124)		—		(667)		(6,791)
Other comprehensive income		—		—	—		—		253		—		253		—		253
Stock issued - other		—		1	—		12		—		—		12		—		12
Balance at March 31, 2021		—		16,817	168		157,995		276		290,021		448,460		4		448,464
Net income		—		—	—		—		—		21,219		21,219		—		21,219
Stock issued under compensation plans, net		—		60	1		318		—		—		319		—		319
Stock-based compensation expense		—		—	—		1,948		—		—		1,948		—		1,948
Shares repurchased related to tax withholding for stock-based compensation		—		(10)	(1)		(637)		—		(96)		(734)		—		(734)

Other comprehensive income	Other comprehensive income	—		—	—		—		413		—		413		—		413		Other comprehensive income	—		—	—		—		1,651		—		1,651

Balance at June 30, 2021		$	—	16,867	$	168	$	159,624	$	689	$	311,144	$	471,625	$	4	$	471,629

Balance at December 31, 2021		$	—	16,871	$	168	$	163,754	$	173	$	355,007	$	519,102	$	—	$	519,102

Balance at March 31, 2022																			Balance at March 31, 2022	$	—	16,995	$	170	$	159,256	$	1,824	$	375,028	$	536,278

Balance at December 31, 2022																			Balance at December 31, 2022	$	—	16,564	$	165	$	161,427	$	(6,300)	$	404,908	$	560,200
Net income	Net income	—		—	—		—		—		20,688		20,688		—		20,688		Net income	—		—	—		—		—		23,163		23,163

Stock issued under compensation plans, net	Stock issued under compensation plans, net	—		193	2		2		—		—		4		—		4		Stock issued under compensation plans, net	—		211	2		18		—		—		20
Stock-based compensation expense	Stock-based compensation expense	—		—	—		1,624		—		—		1,624		—		1,624		Stock-based compensation expense	—		—	—		1,982		—		—		1,982
Shares repurchased related to tax withholding for stock-based compensation	Shares repurchased related to tax withholding for stock-based compensation	—		(69)	—		(6,124)		—		(667)		(6,791)		—		(6,791)		Shares repurchased related to tax withholding for stock-based compensation	—		(76)	—		(7,194)		—		(742)		(7,936)
Other comprehensive income	Other comprehensive income	—		—	—		—		1,651		—		1,651		—		1,651		Other comprehensive income	—		—	—		—		136		—		136

Balance at March 31, 2022		—		16,995	170		159,256		1,824		375,028		536,278		—		536,278
Net income		—		—	—		—		—		19,684		19,684		—		19,684
Stock issued under compensation plans, net		—		9	—		—		—		—		—		—		—
Stock-based compensation expense		—		—	—		2,064		—		—		2,064		—		2,064

Settlement of stock repurchase program		—		(280)	(3)		(2,629)		—		(20,835)		(23,467)		—		(23,467)
Other comprehensive loss		—		—	—		—		(3,477)		—		(3,477)		—		(3,477)

Balance at June 30, 2022		$	—	16,724	$	167	$	158,691	$	(1,653)	$	373,877	$	531,082	$	—	$	531,082

Balance at March 31, 2023																			Balance at March 31, 2023	$	—	16,699	$	167	$	156,233	$	(6,164)	$	427,329	$	577,565

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

MYR GROUP INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS


		Six months ended June 30,					Three months ended March 31,
(in thousands)	(in thousands)	2022		2021		(in thousands)	2023		2022
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income	Net income	$	40,372	$	41,147	Net income	$	23,163	$	20,688
Adjustments to reconcile net income to net cash flows provided by operating activities:	Adjustments to reconcile net income to net cash flows provided by operating activities:					Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation and amortization of property and equipment	Depreciation and amortization of property and equipment	24,043		22,172		Depreciation and amortization of property and equipment	12,763		11,904
Amortization of intangible assets	Amortization of intangible assets	6,020		1,156		Amortization of intangible assets	1,226		2,767
Stock-based compensation expense	Stock-based compensation expense	3,688		3,435		Stock-based compensation expense	1,982		1,624
Deferred income taxes	Deferred income taxes	(1)		481		Deferred income taxes	—		(1)
Gain on sale of property and equipment	Gain on sale of property and equipment	(1,400)		(1,794)		Gain on sale of property and equipment	(1,224)		(748)
Other non-cash items	Other non-cash items	581		1,370		Other non-cash items	62		886
Changes in operating assets and liabilities, net of acquisition:	Changes in operating assets and liabilities, net of acquisition:					Changes in operating assets and liabilities, net of acquisition:
Accounts receivable, net	Accounts receivable, net	(20,457)		(10,098)		Accounts receivable, net	53,819		2,902
Contract assets, net	Contract assets, net	(43,413)		(10,855)		Contract assets, net	(31,868)		(5,745)
Receivable for insurance claims in excess of deductibles	Receivable for insurance claims in excess of deductibles	12,504		304		Receivable for insurance claims in excess of deductibles	(601)		1,531
Other assets	Other assets	(4,939)		10,389		Other assets	15,921		281
Accounts payable	Accounts payable	42,763		47,772		Accounts payable	(19,142)		15,613
Contract liabilities	Contract liabilities	33,619		(21,433)		Contract liabilities	(6,312)		(4,470)
Accrued self-insurance	Accrued self-insurance	(11,861)		1,869		Accrued self-insurance	(2,561)		(352)
Other liabilities	Other liabilities	(21,400)		2,647		Other liabilities	(10,070)		(25,413)
Net cash flows provided by operating activities	Net cash flows provided by operating activities	60,119		88,562		Net cash flows provided by operating activities	37,158		21,467
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Proceeds from sale of property and equipment	Proceeds from sale of property and equipment	1,237		1,637		Proceeds from sale of property and equipment	1,539		1,027
Cash paid for acquired business, net of cash acquired	Cash paid for acquired business, net of cash acquired	(110,576)		—		Cash paid for acquired business, net of cash acquired	—		(110,576)
Purchases of property and equipment	Purchases of property and equipment	(30,421)		(20,997)		Purchases of property and equipment	(19,615)		(14,037)
Net cash flows used in investing activities	Net cash flows used in investing activities	(139,760)		(19,360)		Net cash flows used in investing activities	(18,076)		(123,586)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Net borrowings under revolving lines of credit		51,395		—
Borrowings under revolving lines of credit						Borrowings under revolving lines of credit	9,242		78,331
Repayments under revolving lines of credit						Repayments under revolving lines of credit	(22,157)		(33,138)

Payment of principal obligations under equipment notes	Payment of principal obligations under equipment notes	(516)		(20,635)		Payment of principal obligations under equipment notes	(1,980)		—
Payment of principal obligations under finance leases	Payment of principal obligations under finance leases	(880)		(376)		Payment of principal obligations under finance leases	(302)		(437)
Proceeds from exercise of stock options	Proceeds from exercise of stock options	4		429		Proceeds from exercise of stock options	20		4
Repurchase of common stock		(23,467)		—

Payments related to tax withholding for stock-based compensation	Payments related to tax withholding for stock-based compensation	(6,791)		(3,352)		Payments related to tax withholding for stock-based compensation	(7,936)		(6,791)
Other financing activities		607		12

Net cash flows provided by (used in) financing activities	Net cash flows provided by (used in) financing activities	20,352		(23,922)		Net cash flows provided by (used in) financing activities	(23,113)		37,969
Effect of exchange rate changes on cash	Effect of exchange rate changes on cash	(746)		374		Effect of exchange rate changes on cash	30		790
Net increase (decrease) in cash and cash equivalents		(60,035)		45,654
Net decrease in cash and cash equivalents						Net decrease in cash and cash equivalents	(4,001)		(63,360)
Cash and cash equivalents:	Cash and cash equivalents:					Cash and cash equivalents:
Beginning of period	Beginning of period	82,092		22,668		Beginning of period	51,040		82,092
End of period	End of period	$	22,057	$	68,322	End of period	$	47,039	$	18,732

The accompanying notes are an integral part of these consolidated financial statements.

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MYR GROUP INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. Organization, Business and Basis of Presentation

Organization and Business

MYR Group Inc. (the “Company”) is a holding company of specialty electrical construction service providers and is currently conducting operations through wholly owned subsidiaries. The Company performs construction services in 2two business segments: Transmission and Distribution (“T&D”), and Commercial and Industrial (“C&I”). T&D customers include investor-owned utilities, cooperatives, private developers, government-funded utilities, independent power producers, independent transmission companies, industrial facility owners and other contractors. T&D provides a broad range of services on electric transmission, distribution networks, substation facilities, ~~and~~ clean energy projects and electric vehicle charging infrastructure. T&D services include design, engineering, procurement, construction, upgrade, maintenance and repair services. C&I customers include general contractors, commercial and industrial facility owners, government agencies and developers. C&I provides a broad range of services, which include the design, installation, maintenance and repair of commercial and industrial wiring. Typical C&I contracts cover electrical contracting services for airports, hospitals, data centers, hotels, stadiums, commercial and industrial facilities, clean energy projects, manufacturing plants, processing facilities, water/waste-water treatment facilities, mining facilities, intelligent transportation systems, roadway lighting, signalization and ~~signalization.~~electric vehicle charging infrastructure.

Basis of Presentation

Interim Consolidated Financial Information

The accompanying unaudited consolidated financial statements of the Company were prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial reporting pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC. The Company believes that the disclosures made are adequate to make the information presented not misleading. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary to fairly state the financial position, results of operations, comprehensive income, ~~stockholders’~~shareholders’ equity and cash flows with respect to the interim consolidated financial statements, have been included. Certain reclassifications were made to prior year amounts to conform to the current year presentation. The consolidated balance sheet as of December 31, ~~2021~~2022 has been derived from the audited financial statements as of that date. The results of operations and comprehensive income are not necessarily indicative of the results for the full year or the results for any future periods. These financial statements should be read in conjunction with the audited financial statements and related notes for the year ended December 31, ~~2021,~~2022, included in the Company’s Annual Report on Form 10-K, which was filed with the SEC on February ~~23, 2022~~22, 2023 (the ~~"2021~~"2022 Annual Report").

Joint Ventures and Noncontrolling Interests

The Company accounts for investments in joint ventures using the proportionate consolidation method for income statement reporting and under the equity method for balance sheet reporting, unless the Company has a controlling interest causing the joint venture to be consolidated with equity owned by other joint venture partners recorded as noncontrolling interests. As of March 31, 2023, the Company did not have a controlling interest in any current joint venture partnerships. Under the proportionate consolidation method, joint venture activity is allocated to the appropriate line items found on the consolidated statements of operations in proportion to the percentage of participation the Company has in the joint venture. Under the equity method the net investment in joint ventures is stated as a single item on the Company’s consolidated balance sheets. If an investment in a joint venture contains a recourse or unfunded commitments to provide additional equity, distributions and/or losses in excess of the investment, a liability is recorded in other current liabilities on the Company’s consolidated balance sheets.

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For joint ventures in which the Company does not have a controlling interest, the Company’s share of any profits and assets and its share of any losses and liabilities are recognized based on the Company’s stated percentage partnership interest in the joint venture and are normally recorded by the Company one month in arrears. The investments in joint ventures are recorded at cost and the carrying amounts are adjusted to recognize the Company’s proportionate share of cumulative income or loss, additional contributions made and dividends and capital distributions received. The Company records the effect of any impairment or any other-than-temporary decrease in the value of the joint venture investment as incurred, which may or may not be one month in arrears, depending on when the Company obtains the joint venture activity information. Additionally, the Company continually assesses the fair value of its investment in unconsolidated joint ventures despite using information that is one month in arrears for regular reporting purposes. The Company includes only its percentage ownership of each joint venture in its backlog.

Foreign Currency

The functional currency for the Company’s Canadian operations is the Canadian dollar. Assets and liabilities denominated in Canadian dollars are translated into U.S. dollars at the end-of-period exchange rate. Revenues and expenses are translated using average exchange rates for the periods reported. Equity accounts are translated at historical rates. Cumulative translation adjustments are included as a separate component of accumulated other comprehensive income (loss) in shareholders’ equity. Foreign currency transaction gains and losses, arising primarily from changes in exchange rates on short-term monetary assets and liabilities, and ~~ineffective~~intercompany loans that are not deemed long-term ~~monetary assets and liabilities~~investment accounts are recorded in the “other ~~income (expense),~~expense, net” line on the Company’s consolidated statements of operations. Foreign currency ~~losses,~~gains, recorded in other ~~income,~~expense, net, for the ~~six~~three months ended ~~June 30,~~March 31, 2023 and 2022 were not significant. Foreign currency ~~losses, recorded in other income, net, for the six months ended June 30, 2021 were $0.1 million. Effective foreign currency transaction~~translation gains and losses, arising ~~primarily~~ from intercompany loans that are deemed long-term ~~monetary assets and liabilities,~~investment accounts, are recorded in the foreign currency translation adjustment line on the Company’s consolidated statements of comprehensive income.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the period reported. Actual results could differ from those estimates.

The most significant estimates are related to estimates of costs to complete contracts, pending change orders and claims, shared savings, insurance reserves, income tax reserves, estimates surrounding stock-based compensation, acquisition-related contingent earn-out consideration liabilities, the recoverability of goodwill and intangibles and allowance for doubtful accounts. The Company estimates a cost accrual every quarter that represents costs incurred but not invoiced for services performed or goods delivered during the period, and estimates revenue from the contract cost portion of these accruals based on current gross margin rates to be consistent with its cost method of revenue recognition.

As of ~~June 30,~~March 31, 2023 and December 31, 2022, ~~and 2021,~~ the Company had recognized revenues of ~~$12.5~~$25.2 million and ~~$6.0~~$19.6 million, respectively, related to large change orders and/or claims that had been included as contract price adjustments on certain contracts, some of which are multi-year projects. These change orders and/or claims are in the process of being negotiated in the normal course of business, and a portion of these recognized revenues had been included in multiple periods.

The cost-to-cost method of accounting requires the Company to make estimates about the expected revenue and gross profit on each of its contracts in process. During the three months ended ~~June 30, 2022,~~March 31, 2023, changes in estimates pertaining to certain projects decreased consolidated gross margin by ~~0.1%~~0.6%, which resulted in decreases in operating income of $0.5 million, net income of $0.3 million and diluted earnings per common share of $0.02. During the six months ended June 30, 2022, changes in estimates pertaining to certain projects increased consolidated gross margin by 0.3%, which resulted in increases in operating income of $3.7 million, net income of $2.5 million and diluted earnings per common share of $0.15.

~~During the three months ended June 30, 2021, changes in estimates pertaining to certain projects increased consolidated gross margin by 0.8%, which resulted in increases~~ in operating income of $5.1 million, net income of $3.6 million and diluted earnings per common share of $0.21.

During the ~~six~~three months ended ~~June 30, 2021,~~March 31, 2022, changes in estimates pertaining to certain projects increased consolidated gross margin by ~~0.3%~~0.5%, which resulted in increases in operating income of ~~$3.9~~$3.8 million, net income of $2.7 million and diluted earnings per common share of $0.16.

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Recent Accounting Pronouncements

Changes to U.S. GAAP are typically established by the Financial Accounting Standards Board (“FASB”) in the form of accounting standards updates (“ASUs”) to the FASB’s Accounting Standards Codification (“ASC”). The Company considers the applicability and impact of all ASUs. The Company, based on its assessment, determined that any recently issued or proposed ASUs ~~not listed below~~ are either not applicable to the Company or ~~adoption~~ will have minimal impact on its consolidated financial ~~statements.~~

~~Recently Issued Accounting Pronouncements~~

In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805) Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which is intended to improve the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice and inconsistency related to the recognition of an acquired contract liability and payment terms and their effect on subsequent revenue recognized by the acquirer. Under the new guidance the acquirer is required to recognize contract assets and contract liabilities acquired in a business combination in accordance with Topic 606 as if the acquirer had originated the contracts. The update is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted, including in an interim period, for any period for which financial statements have not yet been issued. However, adoption in an interim period other than the first fiscal quarter requires an entity to apply the new guidance to all prior business combinations that have occurred since the beginning of the annual period in which the new guidance iswhen adopted. ~~The Company is currently evaluating the adoption date and impact, if any, this update will have on its financial position and results of operations.~~

2. ~~Acquisition~~

~~Powerline Plus Ltd~~

On January 4, 2022, the Company acquired all issued and outstanding shares of capital stock of Powerline Plus Ltd. and its affiliate PLP Redimix Ltd. (collectively, the “Powerline Plus Companies"), a full-service electrical distribution construction company based in Toronto, Ontario. Consideration paid, funded through a combination of cash on hand and borrowings under the Facility (as defined below), was $110.6 million, net of cash acquired, and is subject to working capital and net asset adjustments. Additionally, the acquisition includes contingent earn-out consideration that may be payable if the Powerline Plus Companies achieve certain performance targets over a ~~three~~-year post-acquisition period. As of the acquisition date, the fair value of the contingent earn-out consideration was $10.6 million. The future payout of the contingent earn-out consideration, if any, is unlimited and could be significantly higher than the acquisition date fair value. If the minimum thresholds of the performance targets are achieved the contingent earn-out consideration payment will be approximately $17.7 million. There were no changes in contingent earn-out consideration, subsequent to the acquisition, for the three and six months ended June 30, 2022. The results of the Powerline Plus Companies is included in the Company’s consolidated financial statements beginning on the transaction date. Approximately $0.2 million of acquisition-related costs associated with this acquisition were expensed by the Company during the three and six months ended June 30, 2022.

The purchase agreement also includes contingent consideration provisions for down-side margin guarantee adjustments based upon certain contract performance subsequent to the acquisition. The contracts were valued at fair value at the acquisition date, causing no margin guarantee estimate or adjustments for fair value. Unfavorable changes in contract estimates, such as modified costs to complete or change order recognition, will result in changes to these margin guarantee estimates. Changes in margin guarantee adjustments on contracts, subsequent to the acquisition, were recorded in other income and were not significant for the three and six months ended June 30, 2022. Future margin guarantee adjustments, if any, are expected to be recognized through 2022 and possibly in early 2023.

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~~The following table summarizes the allocation of the opening balance sheet as of the date of the Powerline Plus Companies acquisition through June 30, 2022:~~
(in thousands) (as of acquisition date) January 4, 2022 Measurement
Period
Adjustments Acquisition Allocation June 30, 2022
Cash paid $ 114,429 $ — $ 114,429
Contingent consideration - fair value at acquisition date 10,608 — 10,608
Preliminary estimated net asset adjustments 563 (564) (1)
Total consideration, net of estimated net asset adjustments 125,600 (564) 125,036
Less: Acquired cash (3,853) — (3,853)
Total consideration less cash acquired, net of estimated net asset adjustments $ 121,747 $ (564) $ 121,183
Cash and cash equivalents $ 3,853 $ — $ 3,853
Accounts receivable, net 12,131 (52) 12,079
Contract assets, net 12,443 148 12,591
Refundable income taxes 394 280 674
Prepaid expenses and other current assets 1,233 (121) 1,112
Property and equipment 10,366 — 10,366
Operating lease right-of-use assets 6,631 — 6,631
Accounts payable (8,095) (466) (8,561)
Contract liabilities (1,597) (95) (1,692)
Accrued income taxes (686) (37) (723)
Current portion of operating lease obligations (1,224) — (1,224)
Current portion of finance lease obligations (1,492) — (1,492)
Deferred income tax liabilities (672) (221) (893)
Operating lease obligations, net of current maturities (4,897) — (4,897)
Finance lease obligations, net of current maturities (3,243) — (3,243)
Net identifiable assets and liabilities 25,145 (564) 24,581
Unallocated intangible assets 56,650 791 57,441
Total acquired assets and liabilities 81,795 227 82,022
Goodwill $ 43,805 $ (791) $ 43,014

The Company has developed preliminary estimates of fair value of the assets acquired and liabilities assumed for the purposes of allocating the purchase price. During the three months ended June 30, 2022, the Company recorded certain measurement period adjustments related to various working capital and deferred tax accounts determined during our purchase price allocation procedures. The goodwill to be recognized, which represents the excess of the purchase price over the net amount of the fair values assigned to assets acquired and liabilities assumed, is primarily attributable to the value of an assembled workforce and other non-identifiable assets. No synergies were anticipated in the acquisition as the Powerline Plus Companies will function as an individual business within the Company’s operating structure. Further adjustments are expected to the allocation as third party valuations of contingent earn-out consideration, acquired right-of-use assets and lease liabilities and identifiable intangible assets, including backlog, customer relationships, trade name and off-market component, are determined, and as net asset adjustments are finalized. Additionally, the Company is currently performing an analysis of the purchase price allocation and will make appropriate adjustments based on the analysis. A portion of the goodwill and identifiable intangible assets are expected to be tax deductible per applicable Canadian Revenue Authority regulations.

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3. Contract Assets and Liabilities

Contracts with customers usually stipulate the timing of payment, which is defined by the terms found within the various contracts under which work was performed during the period. Therefore, contract assets and liabilities are created when the timing of costs incurred on work performed does not coincide with the billing terms, which frequently include retention provisions contained in each contract.

The Company’s consolidated balance sheets present contract assets, which contain unbilled revenue and contract retainages associated with contract work that has been completed and billed but not paid by customers, pursuant to retainage provisions, that are generally due once the job is completed and approved. The allowance for doubtful accounts associated with contract assets was $0.5 million as of ~~June 30, 2022~~March 31, 2023 and ~~$0.4 million as of~~ December 31, ~~2021.~~2022, respectively.

Contract assets consisted of the following:


(in thousands)	(in thousands)	June 30, 2022		December 31, 2021		Change		(in thousands)	March 31, 2023		December 31, 2022		Change
Unbilled revenue, net	Unbilled revenue, net	$	165,839	$	134,187	$	31,652	Unbilled revenue, net	$	177,725	$	156,266	$	21,459
Contract retainages, net	Contract retainages, net	114,879		90,888		23,991		Contract retainages, net	154,791		144,349		10,442
Contract assets, net	Contract assets, net	$	280,718	$	225,075	$	55,643	Contract assets, net	$	332,516	$	300,615	$	31,901

The Company’s consolidated balance sheets present contract liabilities ~~which~~that contain deferred revenue and an accrual for contracts in a loss provision.

Contract liabilities consisted of the following:


(in thousands)	(in thousands)	June 30, 2022		December 31, 2021		Change		(in thousands)	March 31, 2023		December 31, 2022		Change
Deferred revenue	Deferred revenue	$	200,929	$	165,699	$	35,230	Deferred revenue	$	218,106	$	223,654	$	(5,548)
Accrued loss provision	Accrued loss provision	2,234		2,232		2		Accrued loss provision	2,648		3,401		(753)
Contract liabilities	Contract liabilities	$	203,163	$	167,931	$	35,232	Contract liabilities	$	220,754	$	227,055	$	(6,301)

The following table provides information about contract assets and contract liabilities from contracts with customers:


(in thousands)	(in thousands)	June 30, 2022		December 31, 2021		Change		(in thousands)	March 31, 2023		December 31, 2022		Change
Contract assets, net	Contract assets, net	$	280,718	$	225,075	$	55,643	Contract assets, net	$	332,516	$	300,615	$	31,901
Contract liabilities	Contract liabilities	(203,163)		(167,931)		(35,232)		Contract liabilities	(220,754)		(227,055)		6,301
Net contract assets (liabilities)		$	77,555	$	57,144	$	20,411
Net contract assets								Net contract assets	$	111,762	$	73,560	$	38,202

The difference between the opening and closing balances of the Company’s contract assets and contract liabilities primarily results from the timing of the Company’s billings in relation to its performance of work. The amounts of revenue recognized in the period that were included in the opening contract liability balances were ~~$25.8~~$60.2 million and ~~$58.6~~$17.9 million for the three ~~and six~~ months ended ~~June 30,~~March 31, 2023 and 2022, respectively. ~~The amounts~~

Table of ~~revenue recognized in the period that were included in the opening contract liability balances were $22.3 million and $73.9 million for the three and six months ended June 30, 2021, respectively.~~Contents

The net asset position for contracts in process consisted of the following:

(in thousands) June 30,
2022 December 31,
2021
Costs and estimated earnings on uncompleted contracts $ 4,492,937 $ 4,130,621
Less: billings to date 4,528,027 4,162,133
$ (35,090) $ (31,512)

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(in thousands)	March 31, 2023		December 31, 2022
Costs and estimated earnings on uncompleted contracts	$	5,350,169	$	5,390,535
Less: billings to date	5,390,550		5,457,923
	$	(40,381)	$	(67,388)

The net asset position for contracts in process is included within the contract asset and contract liability in the accompanying consolidated balance sheets as follows:


(in thousands)	(in thousands)	June 30, 2022		December 31, 2021		(in thousands)	March 31, 2023		December 31, 2022
Unbilled revenue	Unbilled revenue	$	165,839	$	134,187	Unbilled revenue	$	177,725	$	156,266
Deferred revenue	Deferred revenue	(200,929)		(165,699)		Deferred revenue	(218,106)		(223,654)
		$	(35,090)	$	(31,512)		$	(40,381)	$	(67,388)

4.3. Lease Obligations

From ~~time-to-time,~~time to time, the Company enters into non-cancelable leases for some of our facility, vehicle and equipment needs. These leases allow the Company to conserve cash by paying a monthly lease rental fee for the use of facilities, vehicles and equipment rather than purchasing them. The Company’s leases have remaining terms ranging from one to seven years, some of which may include options to extend the leases for up to five years, and some of which may include options to terminate the leases within one year. Currently, all the Company’s leases contain fixed payment terms. The Company may decide to cancel or terminate a lease before the end of its term, in which case we are typically liable to the lessor for the remaining lease payments under the term of the lease. Additionally, all of the Company's month-to-month leases are cancelable, by the Company or the lessor, at any time and are not included in our right-of-use asset or liability. At ~~June 30, 2022,~~March 31, 2023, the Company had several leases with residual value guarantees. Typically, the Company has purchase options on the equipment underlying its long-term leases and many of its short-term rental arrangements. The Company may exercise some of these purchase options when the need for equipment is ~~on-going~~ongoing and the purchase option price is attractive. Leases are accounted for as operating or finance leases, depending on the terms of the lease.

The following is a summary of the lease-related assets and liabilities recorded:


			June 30, 2022			December 31, 2021				March 31, 2023		December 31, 2022
(in thousands)	(in thousands)	Classification on the Consolidated Balance Sheet			(in thousands)			Classification on the Consolidated Balance Sheet
Assets	Assets								Assets
Operating lease right-of-use assets	Operating lease right-of-use assets	Operating lease right-of-use assets	$	32,675		$	20,971	Operating lease right-of-use assets	Operating lease right-of-use assets	$	29,437	$	30,544
Finance lease right-of-use assets	Finance lease right-of-use assets	Property and equipment, net of accumulated depreciation	4,965			—		Finance lease right-of-use assets	Property and equipment, net of accumulated depreciation	2,919		3,238
Total right-of-use lease assets	Total right-of-use lease assets		$	37,640		$	20,971	Total right-of-use lease assets		$	32,356	$	33,782

Liabilities	Liabilities							Liabilities
Current	Current							Current
Operating lease obligations	Operating lease obligations	Current portion of operating lease obligations	$	9,405		$	7,765	Operating lease obligations	Current portion of operating lease obligations	$	10,010	$	9,711
Finance lease obligations	Finance lease obligations	Current portion of finance lease obligations	1,318			—		Finance lease obligations	Current portion of finance lease obligations	1,105		1,127
Total current obligations	Total current obligations		10,723			7,765		Total current obligations		11,115		10,838
Non-current	Non-current							Non-current
Operating lease obligations	Operating lease obligations	Operating lease obligations, net of current maturities	23,272			13,230		Operating lease obligations	Operating lease obligations, net of current maturities	19,435		20,845
Finance lease obligations	Finance lease obligations	Finance lease obligations, net of current maturities	3,026			—		Finance lease obligations	Finance lease obligations, net of current maturities	2,039		2,313
Total non-current obligations	Total non-current obligations		26,298			13,230		Total non-current obligations		21,474		23,158
Total lease obligations	Total lease obligations		$	37,021		$	20,995	Total lease obligations		$	32,589	$	33,996

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The following is a summary of the lease terms and discount rates:

June 30,
2022 December 31,
2021
Weighted-average remaining lease term - finance leases 2.2 years 0.0 years
Weighted-average remaining lease term - operating leases 3.9 years 2.9 years
Weighted-average discount rate - finance leases 2.5 % — %
Weighted-average discount rate - operating leases 3.9 % 3.9 %

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	March 31, 2023		December 31, 2022
Weighted-average remaining lease term - finance leases	1.7 years		1.9 years
Weighted-average remaining lease term - operating leases	3.5 years		3.6 years
Weighted-average discount rate - finance leases	3.0	%	3.0	%
Weighted-average discount rate - operating leases	3.8	%	3.8	%

The following is a summary of certain information related to the lease costs for finance and operating leases:


(in thousands)	(in thousands)	Three months ended June 30,				Six months ended June 30,				(in thousands)	Three months ended March 31,
		2022		2021		2022		2021			2023		2022
Lease cost:	Lease cost:									Lease cost:
Finance lease cost:	Finance lease cost:									Finance lease cost:
Amortization of right-of-use assets	Amortization of right-of-use assets	$	218	$	186	$	656	$	375	Amortization of right-of-use assets	$	1,206	$	609
Interest on lease liabilities	Interest on lease liabilities	47		1		75		3		Interest on lease liabilities	24		28
Operating lease cost	Operating lease cost	3,265		2,469		6,388		4,955		Operating lease cost	3,590		3,122

Variable lease costs	Variable lease costs	102		78		211		156		Variable lease costs	89		91
Total lease cost	Total lease cost	$	3,632	$	2,734	$	7,330	$	5,489	Total lease cost	$	4,909	$	3,850

The following is a summary of other information and supplemental cash flow information related to finance and operating leases:


		Six months ended June 30,					Three months ended March 31,
(in thousands)	(in thousands)	2022		2021		(in thousands)	2023		2022
Other information:	Other information:					Other information:
Cash paid for amounts included in the measurement of lease liabilities	Cash paid for amounts included in the measurement of lease liabilities					Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	Operating cash flows from operating leases	$	6,355	$	5,069	Operating cash flows from operating leases	$	3,616	$	3,179
Right-of-use asset obtained in exchange for new operating lease obligations	Right-of-use asset obtained in exchange for new operating lease obligations	$	17,647	$	4,387	Right-of-use asset obtained in exchange for new operating lease obligations	$	1,616	$	4,392
Right-of-use asset obtained in exchange for new finance lease obligations		$	543	$	—

The future undiscounted minimum lease payments, as reconciled to the discounted minimum lease obligation indicated on the Company’s consolidated balance sheets, under financial leases, less interest, and under operating leases, less imputed interest, as of ~~June 30, 2022~~March 31, 2023 were as follows:


(in thousands)	(in thousands)	Finance Lease Obligations		Operating Lease Obligations		Total Lease Obligations		(in thousands)	Finance Lease Obligations		Operating Lease Obligations		Total Lease Obligations
Remainder of 2022		$	781	$	6,378	$	7,159
2023		1,274		11,122		12,396
Remainder of 2023								Remainder of 2023	$	889	$	9,997	$	10,886
2024	2024	2,145		8,124		10,269		2024	2,044		9,663		11,707
2025	2025	331		6,064		6,395		2025	316		7,019		7,335
2026	2026	—		4,779		4,779		2026	—		5,359		5,359
2027	2027	—		1,363		1,363		2027	—		1,626		1,626
2028								2028	—		1,127		1,127
Thereafter	Thereafter	—		2,116		2,116		Thereafter	—		1,787		1,787
Total minimum lease payments	Total minimum lease payments	4,531		39,946		44,477		Total minimum lease payments	3,249		36,578		39,827
Financing component	Financing component	(187)		(7,269)		(7,456)		Financing component	(105)		(7,133)		(7,238)
Net present value of minimum lease payments	Net present value of minimum lease payments	4,344		32,677		37,021		Net present value of minimum lease payments	3,144		29,445		32,589
Less: current portion of finance and operating lease obligations	Less: current portion of finance and operating lease obligations	(1,318)		(9,405)		(10,723)		Less: current portion of finance and operating lease obligations	(1,105)		(10,010)		(11,115)
Long-term finance and operating lease obligations	Long-term finance and operating lease obligations	$	3,026	$	23,272	$	26,298	Long-term finance and operating lease obligations	$	2,039	$	19,435	$	21,474

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The financing component for finance lease obligations represents the interest component of finance leases that will be recognized as interest expense in future periods. The financing component for operating lease obligations represents the effect of discounting the lease payments to their present value.

Certain subsidiaries of the Company have operating leases for facilities from third party companies that are owned, in whole or part, by employees of the subsidiaries. The terms and rental rates of these leases are at or below market rental rates. As of ~~June 30, 2022,~~March 31, 2023, the minimum lease payments required under these leases totaled ~~$7.9~~$6.4 million, which are due over the next ~~4.5~~3.8 years.

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5.4. Fair Value Measurements

The Company uses the three-tier hierarchy of fair value measurement, which prioritizes the inputs used in measuring fair value based upon their degree of availability in external active markets. These tiers include: Level 1 (the highest priority), defined as observable inputs, such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3 (the lowest priority), defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

As of ~~June 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, the Company determined that the carrying value of cash and cash equivalents approximated fair value based on Level 1 inputs. As of ~~June 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, the fair ~~values~~value of the Company’s long-term debt and finance lease obligations ~~were~~was based on Level 2 inputs. The Company’s long-term debt was based on variable and fixed interest rates at ~~June 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, for new issues with similar remaining maturities, and approximated carrying value. In addition, based on borrowing rates currently available to the Company for borrowings with similar terms, the carrying ~~values~~value of the Company’s finance lease obligations also approximated fair value.

As of ~~June 30, 2022,~~March 31, 2023, the fair ~~values~~value of the Company’s contingent earn-out consideration liability associated with the acquisition of ~~the~~ Powerline Plus ~~Companies~~Ltd. and its affiliate PLP Redimix Ltd. (collectively, the “Powerline Plus Companies") was based on Level 3 inputs. The contingent earn-out consideration recorded ~~represent~~represents the estimated fair ~~values~~value of future amounts potentially payable to the former owners of the acquired Powerline Plus Companies and was initially determined using a Monte Carlo simulation valuation methodology based on probability-weighted performance projections and other inputs, including a discount rate and an expected volatility factor. The fair value of this contingent earn-out consideration liability will be evaluated on an ongoing basis by management. Accordingly, the level of inputs used for these fair value measurements is the lowest level (Level 3). Significant changes in any of these assumptions could result in a significantly higher or lower potential liability. As of the acquisition date, the fair value of the contingent earn-out consideration was $0.9 million. As of March 31, 2023 and December 31, 2022, the fair value of the contingent earn-out consideration was $0.2 million. The future payout of the contingent earn-out consideration, if any, is unlimited and could be significantly higher than the acquisition date fair value. If the minimum thresholds of the performance targets are achieved the contingent earn-out consideration payment will be approximately $16.6 million. There were no changes in contingent earn-out consideration during the three months ended March 31, 2023 and 2022. Any changes in contingent earn-out consideration are recorded in other income.

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5. Debt

The table below reflects the Company’s total debt, including borrowings under its credit agreement and master loan agreements for equipment notes:

(dollar amounts in thousands) Inception Date Stated Interest
Rate (per annum) Payment
Frequency Term
(years)
Outstanding
Balance as of
June 30, 2022
Outstanding
Balance as of
December 31, 2021
Credit Agreement
Revolving loans 9/13/2019 Variable Variable 5 $ 51,395 $ —
Equipment Notes
Equipment Note 8 12/27/2019 2.75% Semi-annual 5 3,987 4,503
Other equipment note 4/11/2022 4.55% Monthly 5 64 —
4,051 4,503
Total debt 55,446 4,503
Less: current portion of long-term debt (1,065) (1,039)
Long-term debt $ 54,381 $ 3,464

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(dollar amounts in thousands)	Inception Date	Stated Interest Rate (per annum)	Payment Frequency	Term (years)	Outstanding Balance as of March 31, 2023		Outstanding Balance as of December 31, 2022
Credit Agreement
Revolving loans	9/13/2019	Variable	Variable	5	$	—	$	12,915

Equipment Notes







Equipment Note 8	12/27/2019	2.75%	Semi-annual	5	3,464		3,464
Equipment Note 10	8/26/2022	4.32%	Semi-annual	5	22,142		24,119
Other equipment note	4/11/2022	4.55%	Monthly	5	52		55
					25,658		27,638
Total debt					25,658		40,553
Less: current portion of long-term debt					(5,160)		(5,074)
Long-term debt					$	20,498	$	35,479

Credit Agreement

On September 13, 2019, the Company entered into a five-year amended and restated credit agreement (the “Credit Agreement”) with a syndicate of banks led by JPMorgan Chase Bank, N.A. and Bank of America, ~~N.A,~~N.A. that provides for a $375 million facility (the “Facility”), subject to certain financial covenants as defined in the Credit Agreement, that may be used for revolving loans of which $150 million may be used for letters of credit. The Facility also allows for revolving loans and letters of credit in Canadian dollars and other currencies, up to the U.S. dollar equivalent of $75 million. The Company has an expansion option to increase the commitments under the Facility or enter into incremental term loans, subject to certain conditions, by up to an additional $200 million upon receipt of additional commitments from new or existing lenders. Subject to certain exceptions, the Facility is secured by substantially all of the assets of the Company and its domestic subsidiaries, and by a pledge of substantially all of the capital stock of the Company’s domestic subsidiaries and 65% of the capital stock of the direct foreign subsidiaries of the Company. Additionally, subject to certain exceptions, the Company’s domestic subsidiaries also guarantee the repayment of all amounts due under the Credit Agreement. If an event of default occurs and is continuing, on the terms and subject to the conditions set forth in the Credit Agreement, amounts outstanding under the Facility may be accelerated and may become or be declared immediately due and payable. Borrowings under the Credit Agreement are used for refinancing existing indebtedness, working capital, capital expenditures, acquisitions, share repurchases, and other general corporate purposes.

Amounts borrowed under the Credit Agreement bear interest, at the Company’s option, at a rate equal to either (1) the Alternate Base Rate (as defined in the Credit Agreement), plus an applicable margin ranging from 0.00% to 0.75%; or (2) Adjusted LIBO Rate (as defined in the Credit Agreement) plus an applicable margin ranging from 1.00% to 1.75%. Once LIBOR is no longer available, the Company will amend the Credit Agreement to transition from LIBOR to the Secured Overnight Financing Rate (“SOFR”) or will elect the Alternate Base Rate. The applicable margin is determined based on the Company’s consolidated leverage ratio (the “Leverage Ratio”), which is defined in the Credit Agreement as Consolidated Total Indebtedness (as defined in the Credit Agreement) divided by Consolidated EBITDA (as defined in the Credit Agreement). Letters of credit issued under the Facility are subject to a letter of credit fee of 1.00% to 1.75% for non-performance letters of credit or 0.50% to 0.875% for performance letters of credit, based on the Company’s consolidated Leverage Ratio. The Company is subject to a commitment fee of 0.15% to 0.25%, based on the Company’s consolidated Leverage Ratio, on any unused portion of the Facility. The Credit Agreement restricts certain types of payments when the Company’s consolidated Leverage Ratio exceeds 2.50 or the Company's consolidated Liquidity (as defined in the Credit Agreement) is less than $50 million. The weighted average interest rate on borrowings outstanding on the Facility for the ~~six~~three months ended ~~June 30, 2022~~March 31, 2023 was ~~1.67%~~5.70% per annum.

Under the Credit Agreement, the Company is subject to certain financial covenants and is limited to a maximum consolidated Leverage Ratio of 3.0 and a minimum interest coverage ratio of 3.0, which is defined in the Credit Agreement as Consolidated EBITDA (as defined in the Credit Agreement) divided by interest expense (as defined in the Credit Agreement). The Credit Agreement also contains covenants including limitations on asset sales, investments, indebtedness and liens. The Company was in compliance with all of its financial covenants under the Credit Agreement as of ~~June 30, 2022.~~March 31, 2023.

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As of June 30, 2022, the Company had $51.4 million of debt outstanding under the Facility and letters of credit outstanding under the Facility of approximately $13.3 million, which are almost entirely related to the Company's payment obligation under its insurance programs.

~~As of December~~March 31, ~~2021,~~2023, the Company had no debt outstanding under the Facility and letters of credit outstanding under the Facility of approximately ~~$12.3~~$11.7 million, which ~~are~~were almost entirely related to the Company's payment obligation under its insurance programs.

As of December 31, 2022, the Company had $12.9 million of debt outstanding under the Facility and letters of credit outstanding under the Facility of approximately $12.8 million, which were almost entirely related to the Company's payment obligation under its insurance programs.

The Company had remaining deferred debt issuance costs totaling ~~$0.7~~$0.4 million as of ~~June 30, 2022,~~March 31, 2023, related to the line of credit. As permitted, debt issuance costs have been deferred and are presented as an asset within other assets, which is amortized as interest expense over the term of the line of credit.

Equipment Notes

The Company has entered into Master Equipment Loan and Security Agreements (the “Master Loan Agreements”) with multiple finance companies. The Master Loan Agreements may be used for the financing of equipment between the Company and the lenders pursuant to one or more equipment notes ("Equipment Note"). Each Equipment Note executed under the Master Loan Agreements constitutes a separate, distinct and independent financing of equipment and a contractual obligation of the Company, which may contain prepayment clauses.

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As of ~~June 30, 2022,~~March 31, 2023, the Company had 1two Equipment ~~Note~~Notes outstanding under the Master Loan Agreements that isare collateralized by equipment and vehicles owned by the Company. As of ~~June 30, 2022,~~March 31, 2023, the Company had 1one other equipment note outstanding that is collateralized by a vehicle owned by the Company. The following table sets forth our remaining principal payments for all of the Company’s outstanding equipment notes as of ~~June 30, 2022:~~March 31, 2023:


(in thousands)	(in thousands)	Future Equipment Notes Principal Payments		(in thousands)	Future Equipment Notes Principal Payments
Remainder of 2022		$	529
2023		1,080
Remainder of 2023				Remainder of 2023	$	3,095
2024	2024	2,409		2024	6,578
2025	2025	14		2025	4,364
2026	2026	14		2026	4,555
2027	2027	5		2027	7,066
2028				2028	—

Total future principal payments	Total future principal payments	4,051		Total future principal payments	25,658
Less: current portion of equipment notes	Less: current portion of equipment notes	(1,065)		Less: current portion of equipment notes	(5,160)
Long-term principal obligations	Long-term principal obligations	$	2,986	Long-term principal obligations	$	20,498

7.6. Revenue Recognition

Disaggregation of Revenue

A majority of the Company’s revenues are earned through contracts with customers that normally provide for payment upon completion of specified work or units of work as identified in the contract. Although there is considerable variation in the terms of these contracts, they are primarily structured as fixed-price contracts, under which the Company agrees to perform a defined scope of a project for a fixed amount, or unit-price contracts, under which the Company agrees to do the work at a fixed price per unit of work as specified in the contract. The Company also enters into time-and-equipment and time-and-materials contracts under which the Company is paid for labor and equipment at negotiated hourly billing rates and for other expenses, including materials, as incurred at rates agreed to in the contract. Finally, the Company sometimes enters into cost-plus contracts, where the Company is paid for costs plus a negotiated margin. On occasion, time-and-equipment, time-and-materials and cost-plus contracts require the Company to include a guaranteed not-to-exceed maximum price.

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Historically, fixed-price and unit-price contracts have had the highest potential margins; however, they have had a greater risk in terms of profitability because cost overruns may not be recoverable. Time-and-equipment, time-and-materials and cost-plus contracts have historically had less margin upside, but generally have had a lower risk of cost overruns. The Company also provides services under master service agreements (“MSAs”) and other variable-term service agreements. MSAs normally cover maintenance, upgrade and extension services, as well as new construction. Work performed under MSAs is typically billed on a unit-price, time-and-materials or time-and-equipment basis. MSAs are typically one to three years in duration; however, most of the Company’s contracts, including MSAs, may be terminated by the customer on short notice, typically 30 to 90 days, even if the Company is not in default under the contract. Under MSAs, customers generally agree to use the Company for certain services in a specified geographic region. Most MSAs include no obligation for the contract counterparty to assign specific volumes of work to the Company and do not require the counterparty to use the Company exclusively, although in some cases the MSA contract gives the Company a right of first refusal for certain work. Additional information related to the Company’s market types is provided in Note ~~11–~~10–Segment Information.

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The components of the Company’s revenue by contract type for the three months ended ~~June 30,~~March 31, 2023 and 2022 ~~and 2021~~ were as follows:


		Three months ended June 30, 2022													Three months ended March 31, 2023
		T&D				C&I				Total					T&D				C&I				Total
(dollars in thousands)	(dollars in thousands)	Amount		Percent		Amount		Percent		Amount		Percent		(dollars in thousands)	Amount		Percent		Amount		Percent		Amount		Percent
Fixed price	Fixed price	$	192,934	46.5	%	$	243,682	83.2	%	$	436,616	61.7	%	Fixed price	$	229,234	51.5	%	$	305,621	83.4	%	$	534,855	65.9	%
Unit price	Unit price	117,609		28.3		17,932		6.1		135,541		19.1		Unit price	113,709		25.5		17,642		4.8		131,351		16.2
T&E	T&E	104,692		25.2		31,265		10.7		135,957		19.2		T&E	102,381		23.0		43,029		11.8		145,410		17.9

		$	415,235	100.0	%	$	292,879	100.0	%	$	708,114	100.0	%		$	445,324	100.0	%	$	366,292	100.0	%	$	811,616	100.0	%

Three months ended June 30, 2021
T&D C&I Total
(dollars in thousands) Amount Percent Amount Percent Amount Percent
Fixed price $ 157,421 48.2 % $ 259,213 80.3 % $ 416,634 64.1 %
Unit price 89,944 27.5 18,483 5.7 108,427 16.7
T&E 79,466 24.3 45,046 14.0 124,512 19.2
$ 326,831 100.0 % $ 322,742 100.0 % $ 649,573 100.0 %

~~The components of the Company’s revenue by contract type for the six months ended June 30, 2022 and 2021 were as follows:~~

Six months ended June 30, 2022
T&D C&I Total
(dollars in thousands) Amount Percent Amount Percent Amount Percent
Fixed price $ 343,838 44.1 % $ 462,259 81.9 % $ 806,097 59.9 %
Unit price 221,930 28.4 32,735 5.8 254,665 19.0
T&E 214,323 27.5 69,653 12.3 283,976 21.1
$ 780,091 100.0 % $ 564,647 100.0 % $ 1,344,738 100.0 %


		Six months ended June 30, 2021													Three months ended March 31, 2022
		T&D				C&I				Total					T&D				C&I				Total
(dollars in thousands)	(dollars in thousands)	Amount		Percent		Amount		Percent		Amount		Percent		(dollars in thousands)	Amount		Percent		Amount		Percent		Amount		Percent
Fixed price	Fixed price	$	309,488	48.2	%	$	486,883	81.1	%	$	796,371	64.1	%	Fixed price	$	150,904	41.4	%	$	218,577	80.4	%	$	369,481	58.0	%
Unit price	Unit price	175,289		27.3		36,910		6.2		212,199		17.1		Unit price	104,321		28.6		14,803		5.4		119,124		18.7
T&E	T&E	156,962		24.5		76,527		12.7		233,489		18.8		T&E	109,631		30.0		38,388		14.2		148,019		23.3

		$	641,739	100.0	%	$	600,320	100.0	%	$	1,242,059	100.0	%		$	364,856	100.0	%	$	271,768	100.0	%	$	636,624	100.0	%

The components of the Company’s revenue by market type for the three months ended ~~June 30,~~March 31, 2023 and 2022 ~~and 2021~~ were as follows:

Three months ended June 30, 2022 Three months ended June 30, 2021
(dollars in thousands) Amount Percent Segment Amount Percent Segment
Transmission $ 250,078 35.3 % T&D $ 210,946 32.5 % T&D
Distribution 165,157 23.3 T&D 115,885 17.8 T&D
Electrical construction 292,879 41.4 C&I 322,742 49.7 C&I
Total revenue $ 708,114 100.0 % $ 649,573 100.0 %

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~~The components of the Company’s revenue by market type for the six months ended June 30, 2022 and 2021 were as follows:~~


		Six months ended June 30, 2022					Six months ended June 30, 2021						Three months ended March 31, 2023					Three months ended March 31, 2022
(dollars in thousands)	(dollars in thousands)	Amount		Percent		Segment	Amount		Percent		Segment	(dollars in thousands)	Amount		Percent		Segment	Amount		Percent		Segment
Transmission	Transmission	$	471,685	35.1	%	T&D	$	422,173	34.0	%	T&D	Transmission	$	298,098	36.7	%	T&D	$	221,607	34.8	%	T&D
Distribution	Distribution	308,406		22.9		T&D	219,566		17.7		T&D	Distribution	147,226		18.2		T&D	143,249		22.5		T&D
Electrical construction	Electrical construction	564,647		42.0		C&I	600,320		48.3		C&I	Electrical construction	366,292		45.1		C&I	271,768		42.7		C&I
Total revenue	Total revenue	$	1,344,738	100.0	%		$	1,242,059	100.0	%		Total revenue	$	811,616	100.0	%		$	636,624	100.0	%

Remaining Performance Obligations

As of ~~June 30, 2022,~~March 31, 2023, the Company had ~~$2.31~~$2.51 billion of remaining performance obligations. The Company’s remaining performance obligations include projects that have a written award, a letter of intent, a notice to proceed or an agreed upon work order to perform work on mutually accepted terms and conditions.

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The following table summarizes the amount of remaining performance obligations as of ~~June 30, 2022~~March 31, 2023 that the Company expects to be realized and the amount of the remaining performance obligations that the Company reasonably estimates will not be recognized within the next twelve months.


		Remaining Performance Obligations at June 30, 2022							Remaining Performance Obligations at March 31, 2023
(in thousands)	(in thousands)	Total		Amount estimated to not be recognized within 12 months		Total at December 31, 2021		(in thousands)	Total		Amount estimated to not be recognized within 12 months		Total at December 31, 2022
T&D	T&D	$	940,866	$	136,308	$	572,032	T&D	$	1,136,374	$	234,241	$	898,617
C&I	C&I	1,371,718		490,386		1,105,866		C&I	1,371,231		277,611		1,428,257
Total	Total	$	2,312,584	$	626,694	$	1,677,898	Total	$	2,507,605	$	511,852	$	2,326,874

The Company expects the vast majority of the remaining performance obligations to be recognized within twenty-four months, although the timing of the Company’s performance is not always under its control. Additionally, the difference between the remaining performance obligations and backlog is due to the exclusion of a portion of the Company’s MSAs under certain contract types from the Company’s remaining performance obligations as these contracts can be canceled for convenience at any time by the Company or the customer without considerable cost incurred by the customer. Additional information related to backlog is provided in Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

8.7. Income Taxes

The U.S. federal statutory tax rate was 21% for each of the three ~~and six~~ months ended ~~June 30, 2022~~March 31, 2023 and ~~2021.~~2022. The Company’s effective tax rate for the three ~~and six~~ months ended ~~June 30, 2022~~March 31, 2023 was ~~29.4% and 22.8%, respectively,~~14.4% of pretax income compared to the effective tax rate for the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 of ~~27.0% and 26.6%, respectively.~~15.4%.

The difference between the U.S. federal statutory tax rate and the Company’s effective tax rate for the three months ended ~~June 30,~~March 31, 2023 and March 31, 2022, was primarily due to ~~state income taxes, foreign earnings and other permanent difference items.~~

The difference between the U.S. federal statutory tax rate and the Company’s effective tax rate for the six months ended June 30, 2022, was primarily due to state income taxes, foreign earnings and other permanent difference items partially offset by a favorable impact from stock compensation excess tax ~~benefits.~~

~~The difference between the U.S. federal statutory tax rate and the Company’s effective tax rate for the three and six months ended June 30, 2021, was primarily due to~~benefits partially offset by state income taxes, ~~and foreign earnings and the associated impact of the global intangible low tax income ("GILTI")~~Canadian taxes and other permanent difference ~~items, partially offset by a favorable impact from stock compensation excess tax benefits.~~items.

The Company had unrecognized tax benefits of approximately ~~$0.4~~$0.5 million as of ~~June 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively, which were included in other liabilities in the accompanying consolidated balance sheets.

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The Company’s policy is to recognize interest and penalties related to income tax liabilities as a component of income tax expense in the consolidated statements of operations. The amount of interest and penalties charged to income tax expense related to unrecognized tax benefits was not significant for the three ~~and six~~ months ended ~~June 30, 2022~~March 31, 2023 and ~~2021.~~2022.

The Company is subject to taxation in various jurisdictions. The Company’s ~~2018~~2019 through ~~2020~~2021 tax returns are subject to examination by U.S. federal authorities. The Company’s tax returns are subject to examination by various state authorities for the years ~~2017~~2018 through ~~2020.~~2021.

9.8. Commitments and Contingencies

Purchase Commitments

As of ~~June 30, 2022,~~March 31, 2023, the Company had approximately ~~$14.3~~$26.0 million in outstanding purchase orders for certain construction equipment, with cash payments scheduled to occur ~~over the next seven months.~~in 2023 and 2024.

Insurance and Claims Accruals

The Company carries insurance policies, which are subject to certain deductibles and limits, for workers’ compensation, general liability, automobile liability and other insurance coverage. The deductible per occurrence for each line of coverage is up to $1.0 million, except for wildfire coverage, which has a deductible of $2.0 million. The Company also maintains excess umbrella coverage providing higher layers of insurance coverage for losses that exhaust the limits of underlying coverage. A layer of this umbrella coverage requires the Company to pay a portion of any loss within a certain loss range and our potential exposure for such losses is up to approximately $3.8 million. The Company’s health benefit plans are subject to stop-loss limits of up to $0.2 million for qualified individuals. Losses up to the deductible and stop-loss amounts are accrued based upon the Company’s estimates of the ultimate liability for claims reported and an estimate of claims incurred but not yet reported.

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The insurance and claims accruals are based on known facts, actuarial estimates and historical trends. While recorded accruals are based on the ultimate liability, which includes amounts in excess of the deductible, a corresponding receivable for amounts in excess of the deductible is included in current and long-term assets in the Company’s consolidated balance sheets.

Performance and Payment Bonds and Parent Guarantees

In certain circumstances, the Company is required to provide performance and payment bonds in connection with its future performance on certain contractual commitments. The Company has indemnified its sureties for any expenses paid out under these bonds. As of ~~June 30, 2022,~~March 31, 2023, an aggregate of approximately ~~$1.74~~$2.03 billion in original face amount of bonds issued by the Company’s sureties were outstanding. The Company estimated the remaining cost to complete these bonded projects was approximately ~~$742.3~~$733.3 million as of ~~June 30, 2022.~~March 31, 2023.

From time to time, the Company guarantees the obligations of wholly owned subsidiaries, including obligations under certain contracts with customers, certain lease agreements, and, in some states, obligations in connection with obtaining contractors’ licenses. Additionally, from time to time the Company is required to post letters of credit to guarantee the obligations of wholly owned subsidiaries, which reduces the borrowing availability under the Facility.

Indemnities

From time to time, pursuant to its service arrangements, the Company indemnifies its customers for claims related to the services it provides under those service arrangements. These indemnification obligations may subject the Company to indemnity claims, ~~and~~ liabilities and related litigation. The Company is not aware of any material unrecorded liabilities for asserted claims in connection with these indemnification obligations.

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Collective Bargaining Agreements

Most of the Company’s subsidiaries’ craft labor employees are covered by collective bargaining agreements. The agreements require the subsidiaries to pay specified wages, provide certain benefits and contribute certain amounts to multi-employer pension plans. If a subsidiary withdraws from any of the multi-employer pension plans or if the plans were to otherwise become underfunded, the subsidiary could incur liabilities for additional contributions related to these plans. Although the Company has been informed that the ~~underfunding~~ status of some ~~of the~~ multi-employer pension plans to which its subsidiaries contribute have been classified as “critical” ~~status,~~, the Company is not currently aware of any potential liabilities related to this issue.

Litigation and Other Legal Matters

The Company is from ~~time-to-time~~time to time party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of business. These actions typically seek, among other things, compensation for alleged personal injury, breach of contract, property damages, punitive damages, civil penalties or other losses, or injunctive or declaratory relief.

The Company is routinely subject to other civil claims, litigation and arbitration, and regulatory investigations arising in the ordinary course of our ~~business, as well as in respect of our divested businesses.~~present business. These claims, lawsuits and other proceedings include claims related to the Company’s current services and operations, as well as our historic operations.

With respect to all such lawsuits, claims and proceedings, the Company records reserves when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. The Company does not believe that any of these proceedings, separately or in the aggregate, would be expected to have a material adverse effect on the Company’s financial ~~position,~~condition, results of operations or cash flows.

~~10.~~

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9. Stock-Based Compensation

The Company maintains 2two equity compensation plans under which stock-based compensation has been granted: the 2017 Long-Term Incentive Plan ~~(which was amended~~(Amended and ~~restated~~Restated as of April 23, 2020) (the “LTIP”) and the 2007 Long-Term Incentive Plan ~~(as amended)~~(Amended and Restated as of May 1, 2014) (the “2007 ~~Plan”~~LTIP”). Upon the initial adoption of the ~~original~~ LTIP in 2017, awards were no longer granted under the 2007 ~~Plan.~~LTIP. The LTIP was approved by our shareholders and provides for grants of (a) incentive stock options qualified as such under U.S. federal income tax laws, (b) stock options that do not qualify as incentive stock options, (c) stock appreciation rights, (d) restricted stock awards, (e) restricted stock units, (f) performance ~~share~~ awards, (g) phantom stock, ~~units,~~ (h) stock bonuses, (i) dividend equivalents, ~~and~~or (j) any combination of such grants. The Company has outstanding grants of non-qualified stock options, time-vested stock awards in the form of restricted stock units and internal metric-based and market-based performance stock units.

During the ~~six~~three months ended ~~June 30, 2022,~~March 31, 2023, the Company granted time-vested stock awards covering ~~45,992~~44,628 shares of common stock under the LTIP, which vest ratably over three years for employee awards, ~~and after one year for non-employee director awards,~~ at a weighted average grant date fair value of ~~$76.93.~~$116.47. During the ~~six~~three months ended ~~June 30, 2022,~~March 31, 2023, time-vested stock awards covering ~~73,373~~53,389 shares of common stock vested at a weighted average grant date fair value of ~~$42.47.~~$53.85.

During the ~~six~~three months ended ~~June 30, 2022,~~March 31, 2023, the Company granted ~~31,603~~32,994 performance share awards under the LTIP at target, which will cliff vest, if earned, on December 31, ~~2024,~~2025, at a weighted average grant date fair value of ~~$118.82.~~$136.54. The number of shares ultimately earned under a performance award may vary from zero to 200% of the target shares granted, based upon the Company’s performance compared to certain metrics. The metrics used were determined at the time of the grant by the Compensation Committee of the Board of Directors and were either based on internal measures, such as the Company’s financial performance compared to targets, or on a market-based metric, such as the Company’s stock performance compared to a peer group. Performance awards granted cliff vest following the performance period if the stated performance targets and minimum service requirements are attained and are paid in shares of the Company’s common stock.

During the ~~six~~three months ended ~~June 30, 2022,~~March 31, 2023, plan participants exercised options to purchase ~~236~~827 shares of the Company’s common stock with a weighted average exercise price of ~~$17.48.~~$24.68. During the three months ended March 31, 2023, 42 options expired. As of March 31, 2023, the Company had no remaining outstanding and exercisable options and no awards outstanding under the 2007 Plan.

The Company recognizes stock-based compensation expense related to restricted stock units based on the grant date fair value, which was the closing price of the Company’s stock on the date of grant. The fair value is expensed over the service period, which is generally three years.

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For performance awards, the Company recognizes stock-based compensation expense based on the grant date fair value of the award. The fair value of internal metric-based performance awards is determined by the closing stock price of the Company’s common stock on the date of the grant. The fair value of market-based performance awards is computed using a Monte Carlo simulation. Performance awards are expensed over the service period of approximately 2.8 years, and the Company adjusts the stock-based compensation expense related to internal metric-based performance awards according to its determination of the shares expected to vest at each reporting date.

~~11.~~10. Segment Information

MYR Group is a holding company of specialty contractors serving electrical utility infrastructure and commercial construction markets in the United States and Canada. The Company has 2two reporting segments, each a separate operating segment, which are referred to as T&D and C&I. Performance measurement and resource allocation for the reporting segments are based on many factors. The primary financial measures used to evaluate the segment information are contract revenues and income from operations, excluding general corporate expenses. General corporate expenses include corporate facility and staffing costs, which include safety costs, professional fees, IT expenses and management fees. The accounting policies of the segments are the same as those described in the Note 1–Organization, Business and Significant Accounting Policies to the ~~2021~~2022 Annual Report.

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Transmission and Distribution: The T&D segment provides a broad range of services on electric transmission and distribution networks and substation facilities which include design, engineering, procurement, construction, upgrade, maintenance and repair services with a particular focus on construction, maintenance and repair. T&D services include the construction and maintenance of high voltage transmission lines, substations and lower voltage underground and overhead distribution systems, ~~and~~ clean energy ~~projects.~~projects and electric vehicle charging infrastructure. The T&D segment also provides emergency restoration services in response to hurricane, wildfire, ice or other ~~storm-related~~ damage. T&D customers include investor-owned utilities, cooperatives, private developers, government-funded utilities, independent power producers, independent transmission companies, industrial facility owners and other contractors.

Commercial and Industrial: The C&I segment provides services such as the design, installation, maintenance and repair of commercial and industrial wiring, the installation of intelligent transportation systems, roadway lighting, signalization and ~~signalization.~~electric vehicle charging infrastructure. Typical C&I contracts cover electrical contracting services for airports, hospitals, data centers, hotels, stadiums, commercial and industrial facilities, clean energy projects, manufacturing plants, processing facilities, water/waste-water treatment facilities, mining facilities and transportation control and management systems. The C&I segment generally provides electric construction and maintenance services as a subcontractor to general contractors in the C&I industry, but also contracts directly with facility owners. The C&I segment has a diverse customer base with many long-standing relationships.

The information in the following table is derived from the segment’s internal financial reports used for corporate management purposes:


		Three months ended June 30,				Six months ended June 30,					Three months ended March 31,
(in thousands)	(in thousands)	2022		2021		2022		2021		(in thousands)	2023		2022
Contract revenues:	Contract revenues:									Contract revenues:
T&D	T&D	$	415,235	$	326,831	$	780,091	$	641,739	T&D	$	445,324	$	364,856
C&I	C&I	292,879		322,742		564,647		600,320		C&I	366,292		271,768
		$	708,114	$	649,573	$	1,344,738	$	1,242,059		$	811,616	$	636,624
Income from operations:	Income from operations:									Income from operations:
T&D	T&D	$	32,810	$	32,764	$	63,240	$	61,437	T&D	$	32,821	$	30,431
C&I	C&I	9,512		14,523		19,602		28,796		C&I	10,627		10,090
General Corporate	General Corporate	(16,077)		(17,622)		(31,695)		(33,157)		General Corporate	(16,022)		(15,619)
		$	26,245	$	29,665	$	51,147	$	57,076		$	27,426	$	24,902

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~~12.~~11. Earnings Per Share

The Company computes earnings per share using the treasury stock method. Under the treasury stock method, basic earnings per share are computed by dividing net income available to ~~stockholders~~shareholders by the weighted average number of common shares outstanding during the period, and diluted earnings per share are computed by dividing net income available to ~~stockholders~~shareholders by the weighted average number of common shares outstanding during the period plus all potentially dilutive common stock equivalents, except in cases where the effect of the common stock equivalent would be anti-dilutive.

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Net income and the weighted average number of common shares used to compute basic and diluted earnings per share were as follows:


		Three months ended June 30,				Six months ended June 30,					Three months ended March 31,
(in thousands, except per share data)	(in thousands, except per share data)	2022		2021		2022		2021		(in thousands, except per share data)	2023		2022
Numerator:	Numerator:									Numerator:
Net income	Net income	$	19,684	$	21,219	$	40,372	$	41,147	Net income	$	23,163	$	20,688

Denominator:	Denominator:									Denominator:
Weighted average common shares outstanding	Weighted average common shares outstanding	16,894		16,854		16,904		16,807		Weighted average common shares outstanding	16,618		16,916
Weighted average dilutive securities	Weighted average dilutive securities	176		271		237		286		Weighted average dilutive securities	206		217
Weighted average common shares outstanding, diluted	Weighted average common shares outstanding, diluted	17,070		17,125		17,141		17,093		Weighted average common shares outstanding, diluted	16,824		17,133

Income per common share:	Income per common share:									Income per common share:
Basic	Basic	$	1.17	$	1.26	$	2.39	$	2.45	Basic	$	1.39	$	1.22
Diluted	Diluted	$	1.15	$	1.24	$	2.36	$	2.41	Diluted	$	1.38	$	1.21

For the three ~~and six~~ months ended ~~June 30,~~March 31, 2023 and 2022, ~~and 2021,~~ certain common stock equivalents were excluded from the calculation of dilutive securities because their inclusion would either have been anti-dilutive or, for stock options, the exercise prices of those stock options were greater than the average market price of the Company’s common stock for the period. All of the Company’s unvested time-vested stock awards were included in the computation of weighted average dilutive securities.

The following table summarizes the shares of common stock underlying the Company’s unvested time-vested stock awards and performance awards that were excluded from the calculation of dilutive securities:


		Three months ended June 30,		Six months ended June 30,			Three months ended March 31,
(in thousands)	(in thousands)	2022	2021	2022	2021	(in thousands)	2023	2022
Time-vested stock awards	Time-vested stock awards	35	—	35	—	Time-vested stock awards	45	36
Performance awards	Performance awards	32	17	32	17	Performance awards	33	32

Share Repurchases

On May 4, 2022, the Company announced that its Board of Directors had authorized a new $75.0 million share repurchase program (the "Repurchase Program"). The Repurchase Program was authorized by the Board of Directors on

~~May 3, 2022 and became effective on May 5, 2022. The Repurchase Program will expire on November 7, 2022, or when the~~

~~authorized funds are exhausted, whichever is earlier.~~

During the ~~six~~three months ended ~~June 30, 2022,~~March 31, 2023 the Company repurchased ~~280,907 shares of its common stock under the Repurchase Program at a weighted-average price of $83.54 per share. Additionally, during the six months ended June 30, 2022 the Company repurchased 68,675~~76,150 shares of stock, for approximately ~~$6.8~~$7.9 million, from its employees to satisfy tax obligations on shares vested under the LTIP. ~~All of the shares repurchased were retired. The shares repurchased resulted in no change to authorized shares and an increase to unissued shares. As of June 30,~~

On November 2, 2022, the Company announced that its Board of Directors had ~~$51.5~~authorized a $75.0 million share repurchase program (the "Repurchase Program"), which became effective on November 8, 2022. The Repurchase Program will expire on May 8, 2023, or when the authorized funds are exhausted, whichever is earlier. During the three months ended March 31, 2023, the Company had no repurchases of its common stock under the Repurchase Program. As of March 31, 2023, the Company had $75.0 million of remaining availability to repurchase shares of the Company’s common stock under the Repurchase Program.

2119

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This management’s discussion and analysis provides a narrative on the Company’s financial performance and condition that should be read in conjunction with the accompanying unaudited consolidated financial statements and with our Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022 (the ~~“2021~~“2022 Annual Report”). In addition to historical information, this discussion contains forward-looking statements that involve risks, uncertainties and assumptions that could cause actual results to differ materially from management’s expectations. Factors that could cause such differences are discussed herein under the captions “Cautionary Statement Concerning Forward-Looking Statements and Information” and “Risk Factors,” as well as in the ~~2021~~2022 Annual Report. We assume no obligation to update any of these forward-looking statements.

Overview and Outlook

We are a holding company of specialty electrical construction service providers that was established in 1995 through the merger of long-standing specialty contractors. Through our subsidiaries, we serve the electric utility infrastructure, commercial and industrial construction markets. We manage and report our operations through two electrical contracting service segments: Transmission and Distribution (“T&D”) and Commercial and Industrial (“C&I”).

We have operated in the transmission and distribution industry since 1891. We are one of the largest U.S. contractors servicing the T&D sector of the electric utility industry and provide T&D services throughout the United States and in Ontario, Canada. Our T&D customers include many of the leading companies in the electric utility industry. We have provided electrical contracting services for commercial and industrial construction since 1912. Our C&I segment provides services in the United States and in western Canada. Our C&I customers include facility owners and general contractors.

We believe that we have a number of competitive advantages in both of our segments, including our skilled workforce, extensive centralized fleet, proven safety performance and reputation for timely completion of quality work that allows us to compete favorably in our markets. In addition, we believe that we are better capitalized than some of our competitors, which provides us with valuable flexibility to take on additional and more complex projects.

We believe ~~proposed~~ legislative actions aimed at supporting infrastructure improvements in the United States may positively impact long-term demand, particularly in connection with electric power infrastructure, transportation and clean energy spending. We believe the ~~proposed~~ legislative actions are likely to provide greater long-term opportunity in both of our reporting segments. However both of our segments and supporting operations may be subject to delays and cost volatility due to supply chain disruptions, inflationary pressures, tariffs and regulatory slowdowns, ~~and the continued market disruption from the COVID-19 pandemic,~~ which may result in decelerations in project opportunities and awards.

We had consolidated revenues for the ~~six~~three months ended ~~June 30, 2022~~March 31, 2023 of ~~$1.34 billion,~~$811.6 million, of which ~~58.0%~~54.9% was attributable to our T&D customers and ~~42.0%~~45.1% was attributable to our C&I customers. Our consolidated revenues for the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 were ~~$1.24 billion.~~$636.6 million. For the ~~six~~three months ended ~~June 30, 2022,~~March 31, 2023, our net income and EBITDA(1) were ~~$40.4~~$23.2 million and ~~$83.5~~$41.3 million, respectively, compared to ~~$41.1~~$20.7 million and ~~$80.5~~$39.6 million, respectively, for the ~~six~~three months ended ~~June 30, 2021.~~March 31, 2022.

We believe there is an ongoing need for utilities to sustain investment in their transmission systems to improve reliability, reduce congestion and connect to new clean energy sources. Consequently, we ~~anticipate~~believe that we will continue to see significant bidding activity on large transmission projects going forward. The timing of multi-year transmission project awards and substantial construction activity is difficult to predict due to regulatory requirements and the permitting needed to commence construction. Significant construction on any large, multi-year projects awarded in the remainder of ~~2022~~2023 will not likely have a large impact on ~~2022~~2023 results. Bidding and construction activity for small to medium-size transmission projects and upgrades remain active, and we expect this trend to continue.

(1)EBITDA is a non-GAAP measure. Refer to “Non-GAAP Measure—EBITDA” for a discussion of this measure.

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As a result of reduced spending by United States utilities on their distribution systems for several years, we believe there is a need for sustained investment by utilities on their distribution systems to properly maintain or meet reliability requirements. We continue to see increased bidding activity in some of our electric distribution markets, as economic conditions improved in those areas. We believe the increased storm activity and destruction caused by wildfires will cause a push to strengthen utility distribution systems against catastrophic damage. Distribution systems may also require upgrades to accommodate additional distributed energy resources and increased electrification. Several industry and market trends are also prompting customers in the electric utility industry to seek outsourcing partners rather than performing projects internally. These trends include an aging electric utility workforce, increasing costs and staffing constraints. We believe electric utility employee retirements could increase with further economic recovery, which may result in an increase in outsourcing opportunities. We expect to see an incremental increase in distribution opportunities in the markets we serve during the rest of ~~2022.~~2023.

~~(1)EBITDA is a non-GAAP measure. Refer to “Non-GAAP Measure—EBITDA” for a discussion of this measure.~~

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~~We expect~~Our C&I bidding opportunities tocould be impacted by continued market disruptions, and as a result, the growth of our C&I market will be heavily dependent on the timing and pace of the overall market recovery. We believe that the primary markets we serve ~~may be somewhat less vulnerable to economic slowing,~~ such as health care, transportation, data centers, warehousing, clean energy and ~~water projects.~~water/waste-water projects, may be somewhat less vulnerable to economic slowing.

In addition, the United States has experienced decades of underfunded economic expansion and aging infrastructure ~~which~~that has challenged the capacity of public water and transportation infrastructure forcing states and municipalities to seek creative means to fund needed expansion and repair. We believe the need for expanding public infrastructure will offer opportunity in our C&I segment for several years. Legislation and regulation that promotes domestic manufacturing could also create opportunity for our C&I segment. We expect the long-term growth in our C&I segment to generally track the overall growth of the regions we serve.

We strive to maintain our status as a preferred provider to our T&D and C&I customers. ~~In an effort to support our growth strategy and maximize stockholder returns, we seek to efficiently manage our capital.~~ We ~~continue~~continued to implement strategies that further expand our capabilities and ~~allow~~effectively allocate capital. We have focused on strengthening our balance sheet by reducing our variable rate outstanding debt in the current higher interest rate environment, which has increased our liquidity and allows us to take advantage of future opportunities as they arise. Additionally, as of March 31, 2023, we had $75.0 million of remaining availability to ~~provide prudent capital returns.On January 4, 2022, we acquired all issued and outstanding~~purchase shares ~~of capital stock of Powerline Plus Ltd. and its affiliate (collectively,~~under our share repurchase program, which continues in effect until May 8, 2023, or until the ~~“Powerline Plus Companies"), which expanded our distribution operations in Ontario, Canada.~~authorized funds are exhausted.

We continue to manage our increasing operating costs, ~~for supporting our operations,~~ including increasing insurance, equipment, labor and material costs. We believe that our financial position, positive cash flows and other operational strengths will enable us to manage our markets and give us the flexibility to successfully execute our ~~strategies.~~strategy. We continue to invest in developing key management and craft personnel in both our T&D and C&I markets and in procuring the specific specialty equipment and tooling needed to win and execute projects of all sizes and complexity.

Backlog

We refer to our estimated revenue on uncompleted contracts, including the amount of revenue on contracts for which work has not begun, less the revenue we have recognized under such contracts, as “backlog.” A customer’s intention to award us work under a fixed-price contract is not included in backlog unless there is an actual written award to perform a specific scope of work at specific terms and pricing. For many of our unit-price, time-and-equipment, time-and-materials and cost plus contracts, we only include projected revenue for a three-month period in the calculation of backlog, although these types of contracts are generally awarded as part of master service agreements that typically have a one-year to three-year duration from execution. Backlog may not accurately represent the revenues that we expect to realize during any particular period. Several factors, such as the timing of contract awards, the type and duration of contracts, and the mix of subcontractor and material costs in our projects, can impact our backlog at any point in time. Some of our revenue does not appear in our periodic backlog reporting because the award of the project, as well as the execution of the work, may all take place within the period. Our backlog includes projects that have a written award, a letter of intent, a notice to proceed or an agreed upon work order to perform work on mutually accepted terms and conditions. Backlog should not be relied upon as a stand-alone indicator of future events.

The difference between our backlog and remaining performance obligations is due to the exclusion of a portion of our master service agreements under certain contract types from our remaining performance obligations as these contracts can be canceled for convenience at any time by us or the customer without considerable cost incurred by the customer. Our estimated backlog also includes our proportionate share of unconsolidated joint venture contracts. Additional information related to our remaining performance obligations is provided in Note 7–6–Revenue Recognition in the accompanying notes to our Consolidated Financial Statements.

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Our backlog was ~~$2.44~~$2.67 billion at ~~June 30, 2022,~~March 31, 2023, compared to ~~$1.79~~$2.50 billion at December 31, ~~2021~~2022 and ~~$1.57~~$2.41 billion at ~~June 30, 2021.~~March 31, 2022. Our backlog at ~~June 30, 2022~~March 31, 2023 increased ~~$39.3~~$166.5 million from ~~March~~December 31, 2022. Backlog in the T&D segment ~~decreased $60.6~~increased $216.6 million and C&I backlog ~~increased $99.9~~decreased $50.2 million compared to ~~March~~December 31, 2022. Our backlog as of ~~June 30, 2022~~March 31, 2023 included our proportionate share of joint venture backlog totaling ~~$3.7~~$29.9 million, compared to ~~$4.2~~$30.8 million at ~~March~~December 31, 2022.

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The following table summarizes that amount of our backlog that we believe to be firm as of the dates shown and the amount of our current backlog that we reasonably estimate will not be recognized within the next twelve months:


		Backlog at June 30, 2022							Backlog at March 31, 2023
(in thousands)	(in thousands)	Total		Amount estimated to not be recognized within 12 months		Total backlog at December 31, 2021		(in thousands)	Total		Amount estimated to not be recognized within 12 months		Total backlog at December 31, 2022
T&D	T&D	$	1,062,374	$	136,308	$	676,130	T&D	$	1,282,116	$	234,241	$	1,065,476
C&I	C&I	1,382,468		490,386		1,113,014		C&I	1,386,173		277,611		1,436,351
Total	Total	$	2,444,842	$	626,694	$	1,789,144	Total	$	2,668,289	$	511,852	$	2,501,827

Consolidated Results of Operations

The following table sets forth selected consolidated statements of operations data and such data as a percentage of revenues for the periods indicated:


		Three months ended June 30,								Six months ended June 30,									Three months ended March 31,
		2022				2021				2022				2021					2023				2022
(dollars in thousands)	(dollars in thousands)	Amount		Percent		Amount		Percent		Amount		Percent		Amount		Percent		(dollars in thousands)	Amount		Percent		Amount		Percent
Contract revenues	Contract revenues	$	708,114	100.0	%	$	649,573	100.0	%	$	1,344,738	100.0	%	$	1,242,059	100.0	%	Contract revenues	$	811,616	100.0	%	$	636,624	100.0	%
Contract costs	Contract costs	627,252		88.6		568,551		87.5		1,183,391		88.0		1,084,084		87.3		Contract costs	727,224		89.6		556,139		87.4
Gross profit	Gross profit	80,862		11.4		81,022		12.5		161,347		12.0		157,975		12.7		Gross profit	84,392		10.4		80,485		12.6

Selling, general and administrative expenses	Selling, general and administrative expenses	52,016		7.3		51,890		8.0		105,580		7.9		101,537		8.1		Selling, general and administrative expenses	56,964		7.0		53,564		8.4
Amortization of intangible assets	Amortization of intangible assets	3,253		0.5		578		0.1		6,020		0.4		1,156		0.1		Amortization of intangible assets	1,226		0.2		2,767		0.4
Gain on sale of property and equipment	Gain on sale of property and equipment	(652)		(0.1)		(1,111)		(0.2)		(1,400)		(0.1)		(1,794)		(0.1)		Gain on sale of property and equipment	(1,224)		(0.2)		(748)		(0.1)
Income from operations	Income from operations	26,245		3.7		29,665		4.6		51,147		3.8		57,076		4.6		Income from operations	27,426		3.4		24,902		3.9
Other income (expense):	Other income (expense):																	Other income (expense):
Interest income	Interest income	6		—		15		—		14		—		28		—		Interest income	321		—		8		—
Interest expense	Interest expense	(650)		(0.1)		(678)		(0.1)		(1,101)		(0.1)		(1,153)		(0.1)		Interest expense	(586)		(0.1)		(451)		(0.1)
Other income, net		2,277		0.3		80		—		2,262		0.2		121		—
Other expense, net																		Other expense, net	(90)		—		(15)		—
Income before provision for income taxes	Income before provision for income taxes	27,878		3.9		29,082		4.5		52,322		3.9		56,072		4.5		Income before provision for income taxes	27,071		3.3		24,444		3.8
Income tax expense	Income tax expense	8,194		1.1		7,863		1.2		11,950		0.9		14,925		1.2		Income tax expense	3,908		0.4		3,756		0.6
Net income	Net income	$	19,684	2.8	%	$	21,219	3.3	%	$	40,372	3.0	%	$	41,147	3.3	%	Net income	$	23,163	2.9	%	$	20,688	3.2	%

Three Months Ended ~~June 30, 2022~~March 31, 2023 Compared to Three Months Ended ~~June 30, 2021~~March 31, 2022

Revenues. Revenues were ~~$708.1~~$811.6 million for the three months ended ~~June 30, 2022~~March 31, 2023 compared to ~~$649.6~~$636.6 million for the three months ended ~~June 30, 2021.~~March 31, 2022. The increase of ~~$58.5~~$175.0 million, or ~~9.0%~~27.5%, was primarily due to an increase in C&I revenue ~~on distribution projects, including incremental distribution revenues from the Powerline Plus Companies~~in certain geographical areas and an increase in revenue ~~from~~on both transmission and distribution projects. Clean energy projects ~~partially offset by a decrease~~drove revenue increases in ~~C&I revenue in certain geographical areas.~~both of our segments during the three months ended March 31, 2023.

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Gross margin. Gross margin was ~~11.4%~~10.4% for the three months ended ~~June 30, 2022~~March 31, 2023 compared to ~~12.5%~~12.6% for the three months ended ~~June 30, 2021.~~March 31, 2022. The decrease in gross margin was primarily due to ~~overall cost increases mainly associated with~~labor inefficiencies, some of which were caused by inclement weather and supply chain disruptions ~~inflation and continued impacts from the COVID-19 pandemic, some of which also caused labor and material inefficiencies~~experienced on certain projects. Gross margin was also negatively impacted by an ~~unfavorable change order~~increase in cost associated with an adjustment ~~on a project and inclement weather experienced on certain projects.~~to sales tax accruals for prior periods in one of our operating areas as well as rising costs associated with inflation. These margin decreases were partially offset by better-than-anticipated productivity on ~~certain projects and~~ a ~~favorable job close out.~~project. Changes in estimates of gross profit on certain projects resulted in a gross margin decrease of ~~0.1%~~0.6% and an increase of ~~0.8%~~0.5% for the three months ended ~~June 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively.

Gross profit. Gross profit was ~~$80.9~~$84.4 million for the three months ended ~~June 30, 2022~~March 31, 2023 compared to ~~$81.0~~$80.5 million for the three months ended ~~June 30, 2021.~~March 31, 2022. The ~~decrease~~increase of ~~$0.1~~$3.9 million, or ~~0.2%~~4.9%, was due to ~~lower margins,~~higher revenues, partially offset by ~~higher revenues.~~lower margins.

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Selling, general and administrative expenses. Selling, general and administrative expenses ~~("SG&A")~~ were ~~$52.0~~$57.0 million for the three months ended ~~June 30, 2022~~March 31, 2023 compared to ~~$51.9~~$53.6 million for the three months ended ~~June 30, 2021.~~March 31, 2022. The period-over-period increase of ~~$0.1~~$3.4 million was primarily due to ~~costs associated with~~an increase in employee-related expenses to support the ~~recently acquired Powerline Plus Companies partially offset by a decrease~~growth in our operations and an increase in employee incentive compensation costs.

~~Amortization of intangible assets.~~ Amortization of intangible assets was $3.3 million for the three months ended June 30, 2022 compared to $0.6 million for the three months ended June 30, 2021. The period-over-period increase of $2.7 million was primarily due to amortization related to certain intangibles acquired with the Powerline Plus Companies.

Gain on sale of property and equipment. Gains from the sale of property and equipment for the three months ended ~~June 30, 2022~~March 31, 2023 were ~~$0.7~~$1.2 million compared to ~~$1.1~~$0.7 million for the three months ended ~~June 30, 2021.~~March 31, 2022. Gains from the sale of property and equipment are attributable to routine sales of property and equipment no longer useful or valuable to our ongoing operations.

~~Other income, net~~Interest expense.~~. Other income~~ Interest expense was ~~$2.3~~$0.6 million for three months ended March 31, 2023 compared to $0.5 million for the three months ended ~~June 30, 2022 compared~~March 31, 2022. This increase was primarily attributable to ~~other income of $0.1 million for~~higher interest rates, partially offset by lower average debt balances, during the three months ended ~~June 30, 2021. The change was largely due~~March 31, 2023 as compared to ~~funds received under~~ the ~~Canadian Emergency Wage Subsidy ("CEWS") program, which were attributable to a C&I segment company.~~three months ended March 31, 2022.

Income tax expense. Income tax expense was ~~$8.2~~$3.9 million for the three months ended ~~June 30,~~March 31, 2023, with an effective tax rate of 14.4%, compared to the expense of $3.8 million for the three months ended March 31, 2022, with an effective tax rate of ~~29.4%, compared to the expense of $7.9 million for the three months ended June 30, 2021, with an effective tax rate of 27.0%~~15.4%. The ~~increase~~decrease in the tax rate for the three months ended ~~June 30, 2022~~March 31, 2023 was primarily due to ~~an increase in permanent difference items,~~a higher favorable impact from stock compensation excess tax benefits, partially offset by ~~the reduction of the impact of the global intangible low tax income (“GILTI”).~~higher other permanent difference items.

Net income. Net income was ~~$19.7~~$23.2 million for the three months ended ~~June 30, 2022~~March 31, 2023 compared to ~~$21.2~~$20.7 million for the three months ended ~~June 30, 2021.~~March 31, 2022. The ~~decrease~~increase was primarily due to the reasons stated earlier.

Segment Results

The following table sets forth, for the periods indicated, statements of operations data by segment, segment net sales as percentage of total net sales and segment operating income as a percentage of segment net sales:


		Three months ended June 30,									Three months ended March 31,
		2022				2021					2023				2022
(dollars in thousands)	(dollars in thousands)	Amount		Percent		Amount		Percent		(dollars in thousands)	Amount		Percent		Amount		Percent
Contract revenues:	Contract revenues:									Contract revenues:
Transmission & Distribution	Transmission & Distribution	$	415,235	58.6	%	$	326,831	50.3	%	Transmission & Distribution	$	445,324	54.9	%	$	364,856	57.3	%
Commercial & Industrial	Commercial & Industrial	292,879		41.4		322,742		49.7		Commercial & Industrial	366,292		45.1		271,768		42.7
Total	Total	$	708,114	100.0	%	$	649,573	100.0	%	Total	$	811,616	100.0	%	$	636,624	100.0	%
Operating income (loss):	Operating income (loss):									Operating income (loss):
Transmission & Distribution	Transmission & Distribution	$	32,810	7.9	%	$	32,764	10.0	%	Transmission & Distribution	$	32,821	7.4	%	$	30,431	8.3	%
Commercial & Industrial	Commercial & Industrial	9,512		3.2		14,523		4.5		Commercial & Industrial	10,627		2.9		10,090		3.7
Total	Total	42,322		6.0		47,287		7.3		Total	43,448		5.4		40,521		6.4
General Corporate	General Corporate	(16,077)		(2.3)		(17,622)		(2.7)		General Corporate	(16,022)		(2.0)		(15,619)		(2.5)
Consolidated	Consolidated	$	26,245	3.7	%	$	29,665	4.6	%	Consolidated	$	27,426	3.4	%	$	24,902	3.9	%

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Transmission & Distribution

Revenues for our T&D segment for the three months ended ~~June 30, 2022~~March 31, 2023 were ~~$415.2~~$445.3 million compared to ~~$326.8~~$364.9 million for the three months ended ~~June 30, 2021,~~March 31, 2022, an increase of ~~$88.4~~$80.4 million, or ~~27.0%~~22.1%. The increase in revenue was primarily related to an increase in revenue on ~~distribution~~transmission projects, including ~~incremental distribution~~ revenues ~~from the Powerline Plus Companies~~related to clean energy, and an increase in ~~revenue from transmission~~revenues on distribution projects. Revenues from transmission projects represented ~~60.2%~~66.9% and ~~64.5%~~60.7% of T&D segment revenue for the three months ended ~~June 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively.

Operating income for our T&D segment for the three months ended ~~June 30, 2022~~March 31, 2023 was $32.8 million, an increase of ~~$0.1~~$2.4 million, or ~~0.1%~~7.9%, from the three months ended ~~June 30, 2021.~~March 31, 2022. The increase in T&D operating income from the prior year was primarily due to higher revenues and a favorable job close-out. These increases were partially offset by the additional $2.7 million of amortization related to certain intangibles acquired with the Powerline Plus Companies, an unfavorable change order adjustment on a project and overall cost increases from supply chain disruptions and inflation. Operating income was also negatively impacted by inclement weather experienced on certain projects.revenues. As a percentage of revenues, operating income for our T&D segment was ~~7.9%~~7.4% for the three months ended ~~June 30, 2022~~March 31, 2023 compared to ~~10.0%~~8.3% for the three months ended ~~June 30, 2021.~~March 31, 2022. The decrease in T&D operating income as a percentage of revenues was primarily due to labor inefficiencies caused by inclement weather and supply chain disruptions experienced on certain projects.

Commercial & Industrial

Revenues for our C&I segment for the three months ended ~~June 30, 2022~~March 31, 2023 were ~~$292.9~~$366.3 million compared to ~~$322.7~~$271.8 million for the three months ended ~~June 30, 2021, a decrease~~March 31, 2022, an increase of ~~$29.8~~$94.5 million, or ~~9.3%~~34.8%, primarily due to ~~a decrease in~~higher revenue in certain geographical ~~areas.~~areas including revenues related to clean energy.

Operating income for our C&I segment for the three months ended ~~June 30, 2022~~March 31, 2023 was ~~$9.5~~$10.6 million, ~~a decrease~~an increase of ~~$5.0~~$0.5 million, over the three months ended ~~June 30, 2021.~~March 31, 2022. The period-over-period ~~decrease~~increase in operating income was primarily due to lower revenues and overall cost increases mainly associated with supply chain disruptions, inflation and continued impacts from the COVID-19 pandemic, some of which also caused labor and material inefficiencies on certain projects. The decrease in operating income was partially offset by better-than-anticipated productivity on certain projects.higher revenues. As a percentage of revenues, operating income for our C&I segment was ~~3.2%~~2.9% for the three months ended ~~June 30, 2022~~March 31, 2023 compared to ~~4.5%~~3.7% for the three months ended ~~June 30, 2021.~~

~~Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021~~

~~Revenues.~~ ~~Revenues were $1.34 billion for the six months ended June 30, 2022 compared to $1.24 billion for the six months ended June 30, 2021.~~March 31, 2022. The increase of $102.6 million, or 8.3%, was primarily due to an increase in revenue on distribution projects including incremental distribution revenues from the Powerline Plus Companies and an increase in revenue from transmission projects, partially offset by a decrease in C&I ~~revenue in certain geographical areas.~~

~~Gross margin.~~ Gross margin was 12.0% for the six months ended June 30, 2022 compared to 12.7% for the six months ended June 30, 2021. The decrease in gross margin was primarily due to overall cost increases mainly associated with supply chain disruptions, inflation and continued impacts from the COVID-19 pandemic, some of which also caused labor and material inefficiencies on certain projects, as well as inclement weather experienced on certain projects. These margin decreases were partially offset by favorable job close outs and better-than-anticipated productivity on certain projects. Changes in estimates of gross profit on certain projects resulted in gross margin increases of 0.3% for the six months ended June 30, 2022 and 2021.

~~Gross profit.~~ Gross profit was $161.3 million for the six months ended June 30, 2022 compared to $158.0 million for the six months ended June 30, 2021, the increase of $3.3 million, or 2.1% was due to higher revenues, partially offset by lower margins.

~~Selling, general and administrative expenses.~~ SG&A was $105.6 million for the six months ended June 30, 2022 compared to $101.5 million for the six months ended June 30, 2021. The period-over-period increase of $4.1 million was primarily due to costs associated with the recently acquired Powerline Plus Companies and an increase in employee-related expenses, partially offset by a decrease in employee incentive compensation costs.

~~Amortization of intangible assets.~~ Amortization of intangible assets was $6.0 million for the six months ended June 30, 2022 compared to $1.2 million for the six months ended June 30, 2021. The period-over-period increase of $4.8 million was primarily due to amortization related to certain intangibles acquired with the Powerline Plus Companies.

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~~Gain on sale of property and equipment.~~ Gains from the sale of property and equipment for the six months ended June 30, 2022 were $1.4 million compared to $1.8 million for the six months ended June 30, 2021. Gains from the sale of property and equipment are attributable to routine sales of property and equipment no longer useful or valuable to our ongoing operations.

~~Other income, net~~. Other income was $2.3 million for the six months ended June 30, 2022 compared to other income of $0.1 million for the six months ended June 30, 2021. The change was largely due to funds received under the CEWS program, which were attributable to a C&I segment company.

~~Interest expense.~~ Interest expense was $1.1 million for the six months ended June 30, 2022 compared to $1.2 million for the six months ended June 30, 2021. This decrease was primarily attributable to a decrease in our outstanding debt during the six months ended June 30, 2022 as compared to the six months ended June 30, 2021.

~~Income tax expense.~~ Income tax expense was $12.0 million for the six months ended June 30, 2022, with an effective tax rate of 22.8%, compared to the expense of $14.9 million for the six months ended June 30, 2021, with an effective tax rate of 26.6%. The decrease in the tax rate for the six months ended June 30, 2022 was primarily due to a favorable impact from stock compensation excess tax benefits and the reduction of the impact of GILTI, partially offset by an increase in other permanent difference items.

~~Net income~~.~~Net income was $40.4 million for the six months ended June 30, 2022 compared to $41.1 million for the six months ended June 30, 2021. The decrease was primarily due to the reasons stated earlier.~~

~~Segment Results~~

~~The following table sets forth, for the periods indicated, statements of operations data by segment, segment net sales as percentage of total net sales and segment~~ operating income as a percentage of ~~segment net sales:~~

Six months ended June 30,
2022 2021
(dollars in thousands) Amount Percent Amount Percent
Contract revenues:
Transmission & Distribution $ 780,091 58.0 % $ 641,739 51.7 %
Commercial & Industrial 564,647 42.0 600,320 48.3
Total $ 1,344,738 100.0 % $ 1,242,059 100.0 %
Operating income (loss):
Transmission & Distribution $ 63,240 8.1 % $ 61,437 9.6 %
Commercial & Industrial 19,602 3.5 28,796 4.8
Total 82,842 6.2 90,233 7.3
General Corporate (31,695) (2.4) (33,157) (2.7)
Consolidated $ 51,147 3.8 % $ 57,076 4.6 %

~~Transmission & Distribution~~

Revenues for our T&D segment for the six months ended June 30, 2022 were $780.1 million compared to $641.7 million for the six months ended June 30, 2021, an increase of $138.4 million, or 21.6%. The increase in revenue was primarily related to an increase in revenue on distribution projects, including incremental distribution revenues from the Powerline Plus Companies and an increase in revenue from transmission projects. Revenues from transmission projects represented 60.5% and 65.8% of T&D segment revenue for the six months ended June 30, 2022 and 2021, respectively.

Operating income for our T&D segment for the six months ended June 30, 2022 was $63.2 million, an increase of $1.8 million, or 2.9%, from the six months ended June 30, 2021. The increase in T&D operating income from the prior year was primarily due to ~~higher revenues~~labor inefficiencies, some of which were caused by inclement weather and a favorable job close-out. These increases were partially offset by the additional $4.8 million of amortization related to certain intangibles acquired with the Powerline Plus Companies and overall cost increases from supply chain disruptions, ~~inflation and inclement weather experienced on certain projects. As a percentage~~as well as an increase in cost associated with an adjustment to sales tax accruals for prior periods in one of ~~revenues,~~our operating areas. C&I operating income ~~for our T&D segment~~margin was ~~8.1% for the six months ended June 30, 2022 compared to 9.6% for the six months ended June 30, 2021.~~

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~~Commercial & Industrial~~

Revenues for our C&I segment for the six months ended June 30, 2022 were $564.6 million compared to $600.3 million for the six months ended June 30, 2021, a decrease of $35.7 million, or 5.9%, primarily due to a decrease in revenue in certain geographical areas.

Operating income for our C&I segment for the six months ended June 30, 2022 was $19.6 million, a decrease of $9.2 million over the six months ended June 30, 2021. The period-over-period decrease in operating income was primarily due to overall cost increases mainlyalso negatively impacted by rising costs associated with supply chain disruptions, inflation and continued impacts from the COVID-19 pandemic some of which also caused labor and material inefficiencies on certain projects. The decrease in operating income wasinflation. These decreases were partially offset by better-than-anticipated productivity on ~~certain projects and~~ a ~~favorable job close out. As a percentage of revenues, operating income for our C&I segment was 3.5% for the six months ended June 30, 2022 compared to 4.8% for the six months ended June 30, 2021.~~project.

Non-GAAP Measure—EBITDA

We define EBITDA, a performance measure used by management, as net income plus interest expense net of interest income, provision for income taxes and depreciation and amortization. EBITDA, a non-GAAP financial measure, 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. We believe that EBITDA is useful to investors and other external users of our Consolidated Financial Statements in evaluating our operating performance and cash flow because EBITDA is widely used by investors to measure a company’s operating performance without regard to items such as interest expense, taxes, depreciation and amortization, which can vary substantially from company to company depending upon accounting methods and book value of assets, useful lives placed on assets, capital structure and the method by which assets were acquired. Because not all companies use identical calculations, this presentation of EBITDA may not be comparable to other similarly-titled measures of other companies. We use, and we believe investors benefit from, the presentation of EBITDA in evaluating our operating performance because it provides us and our investors with an additional tool to compare our operating performance on a consistent basis by removing the impact of certain items that management believes do not directly reflect our core operations.

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Using EBITDA as a performance measure has material limitations as compared to net income, or other financial measures as defined under accounting principles generally accepted in the United States of America (“U.S. GAAP”), as it excludes certain recurring items, which may be meaningful to investors. EBITDA excludes interest expense net of interest income; however, as we have borrowed money to finance transactions and operations, or invested available cash to generate interest income, interest expense and interest income are elements of our cost structure and can affect our ability to generate revenue and returns for our ~~stockholders.~~shareholders. Further, EBITDA excludes depreciation and amortization; however, as we use capital and intangible assets to generate revenues, depreciation and amortization are a necessary element of our costs and ability to generate revenue. Finally, EBITDA excludes income taxes; however, as we are organized as a corporation, the payment of taxes is a necessary element of our operations. As a result of these exclusions from EBITDA, any measure that excludes interest expense net of interest income, depreciation and amortization and income taxes has material limitations as compared to net income. When using EBITDA as a performance measure, management compensates for these limitations by comparing EBITDA to net income in each period, to allow for the comparison of the performance of the underlying core operations with the overall performance of the company on a full-cost, after-tax basis. Using both EBITDA and net income to evaluate the business allows management and investors to (a) assess our relative performance against our competitors and (b) monitor our capacity to generate returns for our ~~stockholders.~~

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shareholders.

The following table provides a reconciliation of net income to EBITDA:


		Three months ended June 30,				Six months ended June 30,					Three months ended March 31,
(in thousands)	(in thousands)	2022		2021		2022		2021		(in thousands)	2023		2022

Net income	Net income	$	19,684	$	21,219	$	40,372	$	41,147	Net income	$	23,163	$	20,688
Add:	Add:									Add:
Interest expense, net	Interest expense, net	644		663		1,087		1,125		Interest expense, net	265		443
Income tax expense	Income tax expense	8,194		7,863		11,950		14,925		Income tax expense	3,908		3,756
Depreciation & amortization	Depreciation & amortization	15,392		11,457		30,063		23,328		Depreciation & amortization	13,989		14,671
EBITDA	EBITDA	$	43,914	$	41,202	$	83,472	$	80,525	EBITDA	$	41,325	$	39,558

We also use EBITDA as a liquidity measure. Certain material covenants contained within our credit agreement (the “Credit Agreement”) are based on EBITDA with certain additional adjustments. Non-compliance with these financial covenants under the Credit Agreement — our interest coverage ratio which is defined in the Credit Agreement as Consolidated EBITDA (as defined in the Credit Agreement) divided by interest expense (as defined in the Credit Agreement) and our leverage ratio, which is defined in the Credit Agreement as Consolidated Total Indebtedness (as defined in the Credit Agreement), divided by Consolidated EBITDA (as defined in the Credit Agreement) — could result in our lenders requiring us to immediately repay all amounts borrowed. If we anticipated a potential covenant violation, we would seek relief from our lenders, likely causing us to incur additional cost, and such relief might not be available, or if available, might not be on terms as favorable as those in the Credit Agreement. In addition, if we cannot satisfy these financial covenants, we would be prohibited under the Credit Agreement from engaging in certain activities, such as incurring additional indebtedness, making certain payments, and acquiring or disposing of assets. Based on the information above, management believes that the presentation of EBITDA as a liquidity measure is useful to investors and relevant to their assessment of our capacity to service or incur debt, fund capital expenditures, finance acquisitions and expand our operations.

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The following table provides a reconciliation of net cash flows provided by operating activities to EBITDA:


		Three months ended June 30,				Six months ended June 30,					Three months ended March 31,
(in thousands)	(in thousands)	2022		2021		2022		2021		(in thousands)	2023		2022
Provided by Operating Activities:	Provided by Operating Activities:									Provided by Operating Activities:
Net cash flows provided by operating activities	Net cash flows provided by operating activities	$	38,652	$	29,172	$	60,119	$	88,562	Net cash flows provided by operating activities	$	37,158	$	21,467
Add/(subtract):	Add/(subtract):									Add/(subtract):
Changes in operating assets and liabilities	Changes in operating assets and liabilities	(2,469)		5,710		13,184		(20,595)		Changes in operating assets and liabilities	814		15,653
Adjustments to reconcile net income to net cash flows provided by operating activities	Adjustments to reconcile net income to net cash flows provided by operating activities	(16,499)		(13,663)		(32,931)		(26,820)		Adjustments to reconcile net income to net cash flows provided by operating activities	(14,809)		(16,432)
Depreciation & amortization	Depreciation & amortization	15,392		11,457		30,063		23,328		Depreciation & amortization	13,989		14,671
Income tax expense	Income tax expense	8,194		7,863		11,950		14,925		Income tax expense	3,908		3,756
Interest expense, net	Interest expense, net	644		663		1,087		1,125		Interest expense, net	265		443
EBITDA	EBITDA	$	43,914	$	41,202	$	83,472	$	80,525	EBITDA	$	41,325	$	39,558

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Liquidity, Capital Resources and Material Cash Requirements

As of ~~June 30, 2022,~~March 31, 2023, we had working capital of ~~$219.0~~$223.5 million. We define working capital as current assets less current liabilities. During the ~~six~~three months ended ~~June 30, 2022,~~March 31, 2023, operating activities of our business provided net cash of ~~$60.1~~$37.2 million, compared to ~~$88.6~~$21.5 million of cash provided for the ~~six~~three months ended ~~June 30, 2021.~~March 31, 2022. Cash flow from operations is primarily influenced by operating margins, timing of contract performance and the type of services we provide to our customers. The ~~$28.4~~$15.7 million year-over-year ~~decrease~~increase in cash provided by operating activities was primarily due to ~~unfavorable~~favorable net changes in operating assets and liabilities of ~~$33.8~~$14.8 million, ~~partially offset by~~and an increase of $2.5 million in ~~depreciation and amortization of $6.7 million.~~net income. The ~~unfavorable~~favorable change in operating assets and liabilities was primarily due to ~~unfavorable changes~~the favorable change of ~~$24.0~~$15.6 million in other ~~liabilities~~assets and the favorable change of $15.3 million in other ~~assets,~~liabilities partially offset by the net ~~favorable~~unfavorable year-over-year changes in various working capital accounts that relate primarily to construction activities (accounts receivable, contract assets, accounts payable and contract liabilities) of ~~$7.1~~$11.8 million. The ~~unfavorable~~favorable change of ~~$24.0~~$15.6 million in other assets was primarily due to the timing of prepayments related to materials required for certain projects. The favorable change of $15.3 million in other liabilities was primarily due to the a decrease in accrued incentive compensation. The unfavorable change in other assets was primarily due to the incremental prepayment of materials required for certain projects offset by a favorable changechanges in our ~~prepaid insurance.~~employee incentive compensation accruals. The ~~favorable~~net unfavorable changes of $11.8 million in cash provided by working capital accounts, mainly related to construction activities, ~~was~~were primarily due to unfavorable changes in accounts payable and contract assets partially offset by favorable changes in ~~contract assets and contract liabilities~~accounts receivable, these changes are due to the timing of billings and payments under our contracts.

In the ~~six~~three months ended ~~June 30, 2022,~~March 31, 2023, we used net cash of ~~$139.8~~$18.1 million in investing activities consisting of ~~$110.6 million to acquire the Powerline Plus Companies and $30.4~~$19.6 million for capital expenditures, partially offset by ~~$1.2~~$1.5 million of proceeds from the sale of equipment.

In the ~~six~~three months ended ~~June 30, 2022,~~March 31, 2023, financing activities ~~provided~~used net cash of ~~$20.4~~$23.1 million, consisting primarily of ~~$51.4~~$12.9 million of ~~borrowing~~net repayments under our revolving line of credit, ~~partially offset by share repurchases~~$7.9 million of ~~$23.5 million under our share repurchase program. Additionally, we~~shares repurchased ~~shares of our common stock for approximately $6.8 million, all of which represented shares surrendered~~ to satisfy tax obligations under our stock compensation ~~programs.~~programs and $2.0 million of payments under our equipment notes.

We believe ~~that~~ our ~~$310.3~~$363.3 million borrowing availability under our revolving line of credit at ~~June 30, 2022,~~March 31, 2023, future cash flow from operations and our ability to utilize ~~short-~~short-term and long-term leases will provide sufficient liquidity for our ~~short-~~short-term and long-term needs. Our primary short-term liquidity needs include cash for operations, debt service requirements, capital expenditures, acquisition and joint venture opportunities, share repurchases and $11.8 million of remaining payroll tax deferrals provided under the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act"), which are expected to be paid by the end of 2022.opportunities. We believe that we have adequate sources of liquidity to meet our long-term liquidity needs and foreseeable material cash ~~requirements.~~requirements, including those associated with funding future acquisition opportunities. We continue to invest in developing key management and craft personnel in both our T&D and C&I markets and in procuring the specific specialty equipment and tooling needed to win and execute projects of all sizes and complexity.

We have not historically paid dividends and currently do not expect to pay dividends.

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Debt Instruments

Credit Agreement

On September 13, 2019, we entered into a five-year amended and restated credit agreement (the “Credit Agreement”) with a syndicate of banks led by JPMorgan Chase Bank, N.A. and Bank of America, N.A. The Credit Agreement provides for a facility of $375 million (the “Facility”), subject to certain financial covenants as defined in the Credit Agreement, that may be used for revolving loans of which $150 million may be used for letters of credit. The Facility also allows for revolving loans and letters of credit in Canadian dollars and other currencies, up to the U.S. dollar equivalent of $75 million. We have an expansion option to increase the commitments under the Facility or enter into incremental term loans, subject to certain conditions, by up to an additional $200 million upon receipt of additional commitments from new or existing lenders. Subject to certain exceptions, the Facility is secured by substantially all of our assets and the assets of our domestic subsidiaries and by a pledge of substantially all of the capital stock of our domestic subsidiaries and 65% of the capital stock of our direct foreign subsidiaries. Additionally, subject to certain exceptions, our domestic subsidiaries also guarantee the repayment of all amounts due under the Credit Agreement. If an event of default occurs and is continuing, on the terms and subject to the conditions set forth in the Credit Agreement, amounts outstanding under the Facility may be accelerated and may become or be declared immediately due and payable. Borrowings under the Facility are used for refinancing existing debt, working capital, capital expenditures, acquisitions and other general corporate purposes.

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Amounts borrowed under the Credit Agreement bear interest, at our option, at a rate equal to either (1) the Alternate Base Rate (as defined in the Credit Agreement), plus an applicable margin ranging from 0.00% to 0.75%; or (2) Adjusted LIBO Rate (as defined in the Credit Agreement) plus an applicable margin ranging from 1.00% to 1.75%. Once LIBOR is no longer available, the Company will amend the Credit Agreement to transition from LIBOR to the Secured Overnight Financing Rate (“SOFR”) or will elect the Alternate Base Rate. The applicable margin is determined based on our consolidated leverage ratio (“Leverage Ratio”) which is defined in the Credit Agreement as Consolidated Total Indebtedness (as defined in the Credit Agreement) divided by Consolidated EBITDA (as defined in the Credit Agreement). Letters of credit issued under the Facility are subject to a letter of credit fee of 1.00% to 1.75% for non-performance letters of credit or 0.50% to 0.875% for performance letters of credit, based on our consolidated Leverage Ratio. We are subject to a commitment fee of 0.15% to 0.25%, based on our consolidated Leverage Ratio, on any unused portion of the Facility. The Credit Agreement restricts certain types of payments when our consolidated Leverage Ratio exceeds 2.50 or our consolidated Liquidity (as defined in the Credit Agreement) is less than $50.0 million.

Under the Credit Agreement, we are subject to certain financial covenants and are limited to a maximum consolidated Leverage Ratio of 3.0 and a minimum interest coverage ratio of 3.0, which is defined in the Credit Agreement as Consolidated EBITDA (as defined in the Credit Agreement) divided by interest expense (as defined in the Credit Agreement). The Credit Agreement also contains a number of covenants, including limitations on asset sales, investments, indebtedness and liens. We were in compliance with all of the financial covenants under the Credit Agreement as of ~~June 30, 2022.~~March 31, 2023.

~~We had $51.4 million of debt outstanding under the Facility as of June 30, 2022.~~ We had no debt outstanding under the Facility as of March 31, 2023. We had $12.9 million of debt outstanding under the Facility as of December 31, ~~2021.~~2022.

Letters of Credit

Some of our vendors require letters of credit to ensure reimbursement for amounts they are disbursing on our behalf, such as to beneficiaries under our insurance programs. In addition, from time-to-time certain customers require us to post letters of credit to ensure payment to our subcontractors and vendors under those contracts and to guarantee performance under our contracts. Such letters of credit are generally issued by a bank or similar financial institution. The letter of credit commits the issuer to pay specified amounts to the holder of the letter of credit if the holder claims that we have failed to perform specified actions in accordance with the terms of the letter of credit. If this were to occur, we would be required to reimburse the issuer of the letter of credit. Depending on the circumstances of such a reimbursement, we may also have to record a charge to earnings for the reimbursement. Currently, we do not believe ~~that~~ it is likely that any claims will be made under any letter of credit.

As of ~~June 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, we had ~~$13.3~~$11.7 million and ~~$12.3~~$12.8 million, respectively, in letters of credit outstanding under our Credit Agreement, which ~~are~~were almost entirely related to the Company's payment obligation under its insurance programs.

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Equipment Notes

We have entered into multiple Master Loan Agreements with multiple finance companies. The Master Loan Agreements may be used for financing of equipment between us and the lenders pursuant to one or more equipment notes ("Equipment Notes"). Each Equipment Note constitutes a separate, distinct and independent financing of equipment and contractual obligation.

As of ~~June 30, 2022 and December~~March 31, ~~2021,~~2023, we had ~~one~~two outstanding Equipment ~~Note~~Notes collateralized by equipment and vehicles owned by us. As of ~~June 30,~~December 31, 2022, ~~the Company~~we had two outstanding Equipment Notes collateralized by equipment and vehicles owned by us. As of March 31, 2023 and December 31, 2022, we also had one other equipment note outstanding ~~that is~~ collateralized by a vehicle owned by ~~the Company.~~us. The outstanding balance of all equipment notes was ~~$4.1~~$25.7 million as of ~~June 30, 2022~~March 31, 2023 and ~~$4.5~~$27.6 million as of December 31, ~~2021.~~2022. As of ~~June 30, 2022~~March 31, 2023, we had outstanding short-term and long-term equipment notes of approximately ~~$1.1~~$5.2 million and ~~$3.0~~$20.5 million, respectively. As of December 31, ~~2021,~~2022, we had an outstanding short-term and long-term Equipment ~~Note~~Notes of approximately ~~$1.0~~$5.1 million and ~~$3.5~~$22.6 million, respectively.

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Lease Obligations

The outstanding balance of operating lease obligations was ~~$32.7~~$29.4 million as of ~~June 30,~~March 31, 2023, consisting of short-term and long-term operating lease obligations of approximately $10.0 million and $19.4 million, respectively. The outstanding balance of operating lease obligations was $30.5 million as of December 31, 2022, consisting of short-term and long-term operating lease obligations of approximately ~~$9.4~~$9.7 million and $23.3 million, respectively. The outstanding balance of operating lease obligations was $21.0 million as of December 31, 2021, consisting of short-term and long-term operating lease obligations of approximately $7.8 million and $13.2$20.8 million, respectively.

The outstanding balance of finance lease obligations was ~~$4.3~~$3.1 million as of ~~June 30, 2022,~~March 31, 2023, consisting of short-term and long-term finance lease obligations of approximately ~~$1.3~~$1.1 million and ~~$3.0~~$2.0 million, respectively. As of December 31, ~~2021~~2022 we had no$3.4 million outstanding finance lease ~~obligations.~~obligations, consisting of short-term and long-term finance lease obligations of approximately $1.1 million and $2.3 million, respectively.

Purchase Commitments for Construction Equipment

As of ~~June 30, 2022,~~March 31, 2023, we had approximately ~~$14.3~~$26.0 million in outstanding purchase obligations for certain construction equipment to be paid with cash outlays scheduled to occur ~~over the next seven months.~~in 2023 and 2024.

Performance and Payment Bonds and Parent Guarantees

Many customers, particularly in connection with new construction, require us to post performance and payment bonds issued by a financial institution known as a surety. These bonds provide a guarantee to the customer that we will perform under the terms of a contract and that we will pay subcontractors and vendors. If we fail to perform under a contract or to pay subcontractors and vendors, the customer may demand that the surety make payments or provide services under the bond. We must reimburse our sureties for any expenses or outlays they incur. Under our continuing indemnity and security agreements with our sureties, with the consent of our lenders under the Credit Agreement, we have granted security interests in certain of our assets to collateralize our obligations to the surety. We may be required to post letters of credit or other collateral in favor of the surety or our customers. Posting letters of credit in favor of the surety or our customers reduces the borrowing availability under the Credit Agreement. To date, we have not been required to make any reimbursements to any of our sureties for bond-related costs. We believe that it is unlikely that we will have to fund significant claims under our surety arrangements. As of ~~June 30, 2022,~~March 31, 2023, an aggregate of approximately ~~$1.74~~$2.03 billion in original face amount of bonds issued by our sureties were outstanding. Our estimated remaining cost to complete these bonded projects was approximately ~~$742.3~~$733.3 million as of ~~June 30, 2022.~~March 31, 2023.

From time to time, we guarantee the obligations of our wholly owned subsidiaries, including obligations under certain contracts with customers, certain lease agreements, and, in some states, obligations in connection with obtaining contractors’ licenses. Additionally, from time to time, we are required to post letters of credit to guarantee the obligations of our wholly owned subsidiaries, which reduces the borrowing availability under our credit facility.

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Concentration of Credit Risk

We grant trade credit under normal payment terms, generally without collateral, to our customers, which include high credit quality electric utilities, governmental entities, general contractors and builders, owners and managers of commercial and industrial properties located in the United States. Consequently, we are subject to potential credit risk related to changes in business and economic factors throughout the United States. However, we generally have certain statutory lien rights with respect to services provided. Under certain circumstances such as foreclosures or negotiated settlements, we may take title to the underlying assets in lieu of cash in settlement of receivables. As of ~~June 30,~~March 31, 2023 and 2022, ~~and 2021,~~ none of our customers individually exceeded 10% of consolidated accounts receivable. Management believes the terms and conditions in its contracts, billing and collection policies are adequate to minimize the potential credit risk.

New Accounting Pronouncements

For a discussion regarding new accounting pronouncements, please refer to Note 1–Organization, Business and Basis of Presentation—Recent Accounting Pronouncements in the accompanying notes to our Consolidated Financial Statements.

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Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities known to exist at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. We evaluate our estimates on an ongoing basis, based on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. There can be no assurance that actual results will not differ from those estimates. For further information regarding our critical accounting policies and estimates, please refer to Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies” included in our ~~2021~~2022 Annual Report.

Cautionary Statement Concerning Forward-Looking Statements and Information

We are including the following discussion to inform you of some of the risks and uncertainties that can affect our company and to take advantage of the protections for forward-looking statements that applicable federal securities law affords.

Statements in this Quarterly Report on Form 10-Q contain various forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”), which represent our management’s beliefs and assumptions concerning future events. When used in this document and in documents incorporated by reference, forward-looking statements include, without limitation, statements regarding financial forecasts or projections, and our expectations, beliefs, intentions or future strategies that are signified by the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “likely,” “may,” “objective,” “outlook,” “plan,” “project,” “possible,” “potential,” “should”, "unlikely,” or other words that convey the uncertainty of future events or outcomes. The forward-looking statements in this Quarterly Report on Form 10-Q speak only as of the date of this Quarterly Report on Form 10-Q. 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. ~~In addition, many of these risks, contingencies and uncertainties are currently amplified by, and may continue to be amplified by, the COVID-19 pandemic.~~ These and other important factors, including those discussed under the caption “Forward-Looking Statements” and in Item 1A. “Risk Factors” in our ~~2021~~2022 Annual Report, and in any risk factors or cautionary statements contained in our other filings with the Securities and Exchange Commission, may cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements.

These risks, contingencies and uncertainties include, but are not limited to, the following:

•Our operating results may vary significantly from period to period.

•Our industry is highly competitive.

•Negative economic and market conditions including tariffs on materials and recessionary conditions may in the future adversely impact our customers’ ~~future~~ spending and, as a result, our operations and growth.

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•We may be unsuccessful in generating internal growth, which could impact the projects available to the Company.

•Our inability to successfully execute or integrate acquisitions or joint ventures may have an adverse impact on our growth strategy and business.

•Project performance issues, including those caused by third parties, or certain contractual obligations may result in additional costs to us, reductions or delays in revenues or the payment of penalties, including liquidated damages.

•We may be unable to attract and retain qualified personnel.

•The timing of new contracts and termination of existing contracts may result in unpredictable fluctuations in our cash flows and financial results.

•During the ordinary course of our business, we may become subject to lawsuits or indemnity claims.

•Backlog may not be realized or may not result in profits and may not accurately represent future revenue.

•Our insurance has limits and exclusions that may not fully indemnify us against certain claims or losses, including claims resulting from wildfires or other natural disasters and an increase in cost, or the unavailability or cancellation of ~~third party~~third-party insurance coverages would increase our overall risk exposure and could disrupt our operations and reduce our profitability.

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•Risks associated with operating in the Canadian market could ~~restrict~~impact our ~~ability to expand and harm our business and prospects.~~profitability.

•Changes in tax laws or our interpretations of tax laws could materially impact our income tax liabilities.

•The nature of our business exposes us to potential liability for warranty claims and faulty engineering, which may reduce our profitability.

•~~Health~~Pandemic outbreaks of disease, such as the COVID-19 pandemic, have in the past had and may in the future have an adverse impact on our business, employees, liquidity, financial condition, results of operations and cash flows.

•Our dependence on suppliers, subcontractors and equipment manufacturers could expose us to the risk of loss in our operations.

•Our participation in joint ventures and other projects with third parties may expose us to liability for failures of our partners.

•Legislative or regulatory actions relating to electricity transmission and ~~renewable~~clean energy may impact demand for our services.

•We may incur liabilities and suffer negative financial or reputational impacts relating to occupational health and safety matters, including those related to environmental hazards such as wildfires and other natural disasters.

•Our failure to comply with environmental and other laws and regulations could result in significant liabilities.

•Our business may be affected by seasonal and other variations, including severe weather conditions and the nature of our work environment.

•Opportunities associated with government contracts could lead to increased governmental regulation applicable to us.

•We are subject to risks associated with climate change including financial risks and physical risks such as an increase in extreme weather events (such as floods, wildfires or hurricanes), rising sea levels and limitations on water availability and quality.

•Our use of percentage-of-completion accounting could result in a reduction or reversal of previously recognized revenues and profits.

•Our financial results are based upon estimates and assumptions that may differ from actual results.

•Our actual costs may be greater than expected in performing our fixed-price and unit-price contracts.

•An increase in the cost or availability for items such as materials, parts, commodities, equipment and tooling may also be impacted by trade regulations, tariffs, global relations, taxes, transportation costs and inflation which could adversely affect our business.

•We may not be able to compete for, or work on, certain projects if we are not able to obtain necessary bonds, letters of credit, bank guarantees or other financial assurances.

•Work stoppages or other labor issues with our unionized workforce could adversely affect our business, and we may be subject to unionization attempts.

•Multi-employer pension plan obligations related to our unionized workforce could adversely impact our earnings.

•We rely on information, communications and data systems in our operations and we or our business partners may be subject to failures, interruptions or breaches of such systems, which could affect our operations or our competitive position, expose sensitive information or damage our reputation.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As of ~~June 30, 2022,~~March 31, 2023, we were not party to any derivative instruments. We did not use any material derivative financial instruments during the ~~six~~three months ended ~~June 30,~~March 31, 2023 and 2022, ~~and 2021,~~ including instruments for trading, hedging or speculating on changes in interest rates or commodity prices of materials used in our business.

~~As of June 30, 2022, we had $51.4 million of borrowings under our Facility.~~ Any borrowings under our Facility are based upon interest rates that will vary depending upon the prime rate, Canadian prime rate, federal funds effective rate, the NYFRB overnight bank funding rate, CDOR, and LIBOR (or any interest rate replacing LIBOR). If the prime rate, Canadian prime rate, federal funds effective rate, the NYFRB overnight bank funding rate, CDOR, or LIBOR (or any interest rate replacing LIBOR) rises, any interest payment obligations would increase and have a negative effect on our cash flow and financial condition. We currently do not maintain any hedging contracts that would limit our exposure to variable rates of interest when we have outstanding borrowings. ~~If market rates~~As of ~~interest on all~~March 31, 2023, we did not have any borrowings under our revolving debt as of June 30, 2022, which is subject to variable rates, permanently increased by 1%, the increase in interest expense on all revolving debt would decrease future income before provision for income taxes and cash flows by approximately $0.5 million annually. If market rates of interest on all our revolving debt, which is subject to variable rates as of June 30, 2022, permanently decreased by 1%, the decrease in interest expense on all debt would increase future income before provision for income taxes and cash flows by approximately $0.5 million annually.Facility.

Borrowings under our equipment notes are at fixed rates established on the date the respective equipment note was executed.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Under the supervision, and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures, as defined under Exchange Act Rules 13a-15(e) and 15d-15(e), as of the end of the period covered by this quarterly report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of ~~June 30, 2022.~~March 31, 2023.

Changes in Internal Control Over Financial Reporting

During the period covered by this report, there were no changes in our internal control over financial reporting that materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

For discussion regarding legal proceedings, please refer to Note 9–8–Commitments and Contingencies—Litigation and Other Legal Matters in the accompanying notes to our Consolidated Financial Statements.

ITEM 1A. RISK FACTORS

We face a number of risks that could materially and adversely affect our business, employees, liquidity, financial condition, results of operations and cash flows. A discussion of our risk factors can be found in Item 1A. “Risk Factors” in our ~~2021~~2022 Annual Report. As of the date of this filing, there have been no material changes to the risk factors previously discussed in Item 1A. “Risk Factors” in our ~~2021~~2022 Annual Report. An investment in our common stock involves various risks. When considering an investment in ~~our company,~~the Company, you should carefully consider all of the risk factors described in our ~~2021~~2022 Annual Report. These risks and uncertainties are not the only ones facing us and there may be additional matters that are not known to us or that we currently consider immaterial. These risks and uncertainties could adversely affect our business, employees, liquidity, financial condition, results of operations or cash flows and, thus, the value of our common stock and any investment in ~~our company.~~the Company.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Purchases of Common Stock. The following table includes all of the Company’s repurchases of common stock for the periods shown. Repurchased shares are retired and returned to authorized but unissued common stock.

Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (1)
April 1, 2022 - April 30, 2022 — $ — — $ —
May 1, 2022 - May 31, 2022 167,126 $ 83.32 167,126 $ 61,075,512
June 1, 2022 - June 30, 2022 113,781 $ 83.87 113,781 $ 51,532,988
Total 280,907 $ 83.54 280,907


Period	Total Number of Shares Purchased (1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (2)
January 1, 2023 - January 31, 2023	—	$	—	—	$	75,000,000
February 1, 2023 - February 28, 2023	55,873	$	99.77	—	$	75,000,000
March 1, 2023 - March 31, 2023	20,277	$	116.47	—	$	75,000,000
Total	76,150	$	104.22	—

(1) This column contains repurchases of common stock to satisfy tax obligations on the vesting of performance and restricted stock under the 2017 Long-Term Incentive Plan (as amended).

(2) On ~~May 4,~~November 2, 2022, the Company announced that its Board of Directors had authorized a new $75.0 million share repurchase program (the "Repurchase Program")~~. The Repurchase Program was authorized by the Board of Directors on May 3, 2022 and~~, which became effective on ~~May 5,~~November 8, 2022. The Repurchase Program will expire on ~~November 7, 2022,~~May 8, 2023, or when the authorized funds are exhausted, whichever is earlier. As of ~~June 30, 2022,~~March 31, 2023, the Company had ~~$51.5~~$75.0 million of remaining availability to repurchase shares of the Company’s common stock under the Repurchase Program.

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ITEM 6. EXHIBITS


Number						Description
3.1						Certificate of Amendment to the Restated Certificate of Incorporation of MYR Group Inc., incorporated by reference to exhibit 3.1 of the Company’s Current Report on Form 8-K (File No. 001-08325), filed with the SEC on April 24, 2023
3.2						Amended and Restated By-Laws of MYR Group Inc., incorporated by reference to exhibit 3.1 of the Company’s Current Report on Form 8-K (File No. 001-08325), filed with the SEC on April 24, 2023
10.1						Employment Agreement, dated January 9, 2023 between the Company and Kelly M. Huntington, incorporated by reference to exhibit 10.27 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 (File No. 001-08325), filed with the SEC on February 22, 2023+
31.1						Certification of Chief Executive Officer pursuant to SEC Rule 13a-14(a)/15d-14(a)†
31.2						Certification of Chief Financial Officer pursuant to SEC Rule 13a-14(a)/15d-14(a)†
32.1						Certification of Chief Executive Officer pursuant to 18 U.S.C. §1350†
32.2						Certification of Chief Financial Officer pursuant to 18 U.S.C. §1350†

101.INS						Inline XBRL Instance Document*
101.SCH						Inline XBRL Taxonomy Extension Schema Document*
101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document*
101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document*
101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document*
101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document*
104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)*

† Filed herewith

+ Indicates management contract or compensatory plan or arrangement

* Electronically filed

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


			MYR GROUP INC. (Registrant)

~~July 27, 2022~~April 26, 2023			/s/ ~~BETTY R. JOHNSON~~KELLY M. HUNTINGTON
			~~Betty R. Johnson~~Kelly M. Huntington Senior Vice President and Chief Financial Officer

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(in thousands)	(as of acquisition date) January 4, 2022		Measurement Period Adjustments		Acquisition Allocation June 30, 2022
Cash paid	$	114,429	$	—	$	114,429
Contingent consideration - fair value at acquisition date	10,608		—		10,608
Preliminary estimated net asset adjustments	563		(564)		(1)
Total consideration, net of estimated net asset adjustments	125,600		(564)		125,036
Less: Acquired cash	(3,853)		—		(3,853)
Total consideration less cash acquired, net of estimated net asset adjustments	$	121,747	$	(564)	$	121,183

Cash and cash equivalents	$	3,853	$	—	$	3,853
Accounts receivable, net	12,131		(52)		12,079
Contract assets, net	12,443		148		12,591
Refundable income taxes	394		280		674
Prepaid expenses and other current assets	1,233		(121)		1,112
Property and equipment	10,366		—		10,366
Operating lease right-of-use assets	6,631		—		6,631
Accounts payable	(8,095)		(466)		(8,561)
Contract liabilities	(1,597)		(95)		(1,692)
Accrued income taxes	(686)		(37)		(723)
Current portion of operating lease obligations	(1,224)		—		(1,224)
Current portion of finance lease obligations	(1,492)		—		(1,492)
Deferred income tax liabilities	(672)		(221)		(893)
Operating lease obligations, net of current maturities	(4,897)		—		(4,897)
Finance lease obligations, net of current maturities	(3,243)		—		(3,243)
Net identifiable assets and liabilities	25,145		(564)		24,581
Unallocated intangible assets	56,650		791		57,441
Total acquired assets and liabilities	81,795		227		82,022
Goodwill	$	43,805	$	(791)	$	43,014


	Three months ended June 30, 2021
	T&D				C&I				Total
(dollars in thousands)	Amount		Percent		Amount		Percent		Amount		Percent
Fixed price	$	157,421	48.2	%	$	259,213	80.3	%	$	416,634	64.1	%
Unit price	89,944		27.5		18,483		5.7		108,427		16.7
T&E	79,466		24.3		45,046		14.0		124,512		19.2

	$	326,831	100.0	%	$	322,742	100.0	%	$	649,573	100.0	%


Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (1)
April 1, 2022 - April 30, 2022	—	$	—	—	$	—
May 1, 2022 - May 31, 2022	167,126	$	83.32	167,126	$	61,075,512
June 1, 2022 - June 30, 2022	113,781	$	83.87	113,781	$	51,532,988
Total	280,907	$	83.54	280,907