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MYR Group Inc. Announces Fourth-Quarter And Full-Year 2012 Results

Forward-Looking Statements

Various statements in this announcement, including those that express a belief, expectation, or intention, as well as those that are not statements of historical fact, are forward-looking statements. The forward-looking statements may include projections and estimates concerning the timing and success of specific projects and our future production, revenue, income, capital spending, segment improvements and investments. Forward-looking statements are generally accompanied by words such as "estimate," "project," "predict," "believe," "expect," "anticipate," "potential," "plan," "goal," "see," "should," "appears" or other words that convey the uncertainty of future events or outcomes. The forward-looking statements in this announcement speak only as of the date of this announcement; we disclaim any obligation to update these statements (unless required by securities laws), and we caution you not to rely on them unduly. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. No forward-looking statement can be guaranteed and actual results may differ materially from those projected. Forward-looking statements in this press announcement should be evaluated together with the many uncertainties that affect MYR's business, particularly those mentioned in the risk factors and cautionary statements in Item 1A of MYR's Annual Report on Form 10-K for the fiscal year ended December 31, 2012, and in any risk factors or cautionary statements contained in MYR's Quarterly Reports on Form 10-Q or Current Reports on Form 8-K.

Financial tables follow…

MYR GROUP INC.
Unaudited Consolidated Balance Sheets
As of December 31, 2012 and 2011
     
(in thousands, except share and per share data) 2012 2011
ASSETS    
Current assets    
Cash and cash equivalents   $ 19,825  $ 34,013
Accounts receivable, net of allowances of $1,305 and $1,078, respectively  167,241  126,911
Costs and estimated earnings in excess of billings on uncompleted contracts   61,773  43,694
Construction materials inventory   —   4,003
Deferred income tax assets   12,742  13,253
Receivable for insurance claims in excess of deductibles   11,379  10,122
Refundable income taxes   1,044  884
Other current assets   4,396  3,071
Total current assets   278,400  235,951
Property and equipment, net of accumulated depreciation of $88,042 and $64,345, respectively  128,911  117,178
Goodwill   46,599  46,599
Intangible assets, net of accumulated amortization of $2,558 and $2,223, respectively  10,534  10,869
Other assets   1,904  1,971
Total assets   $ 466,348  $ 412,568
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
Current liabilities    
Short-term borrowings  $ —   $ 10,000
Accounts payable  84,481 73,924
Billings in excess of costs and estimated earnings on uncompleted contracts   32,589  24,945
Accrued self insurance   39,583  38,850
Other current liabilities   32,240  29,078
Total current liabilities   188,893  176,797
Deferred income tax liabilities   21,530  19,354
Other liabilities   1,235  679
Total liabilities   211,658  196,830
Commitments and contingencies    
Stockholders' equity    
Preferred stock—$0.01 par value per share; 4,000,000 authorized shares; none issued and outstanding at December 31, 2012 and 2011  —   — 
Common stock—$0.01 par value per share; 100,000,000 authorized shares; 20,747,161 and 20,405,044 shares issued and outstanding at December 31, 2012 and 2011, respectively  206  203
Additional paid-in capital   154,564  149,877
Retained earnings  99,920  65,658
Total stockholders' equity   254,690  215,738
Total liabilities and stockholders' equity   $ 466,348  $ 412,568
 
MYR GROUP INC.
Unaudited Consolidated Statements of Operations
Three Months and Twelve Months Ended December 31, 2012 and 2011
         
         
  Three months ended For the year ended
(in thousands, except per share data)  December 31,   December 31, 
  2012 2011 2012 2011
Contract revenues   $ 247,763  $ 234,263  $ 998,959  $ 780,356
Contract costs   214,847  209,638  880,306  694,790
Gross profit   32,916  24,625  118,653  85,566
Selling, general and administrative expenses   17,503  15,602  63,575  56,776
Amortization of intangible assets   84  84  335  335
Gain on sale of property and equipment   (312)  (446)  (1,019)  (1,174)
Income from operations   15,641  9,385  55,762  29,629
Other income (expense):        
Interest income   1  5  2  53
Interest expense   (98)  (81)  (852)  (544)
Other, net   (76)  (28)  (222)  (81)
Income before provision for income taxes  15,468  9,281  54,690  29,057
Income tax expense  5,697  3,421  20,428  10,759
Net income  $ 9,771  $ 5,860  $ 34,262  $ 18,298
Income per common share:        
—Basic   $ 0.47  $ 0.29  $ 1.67  $ 0.90
—Diluted   $ 0.46  $ 0.28  $ 1.60  $ 0.87
Weighted average number of common shares and potential common shares outstanding:        
—Basic   20,516  20,295  20,391  20,151
—Diluted   21,253  21,053  21,172  20,993
 
MYR GROUP INC.
Unaudited Consolidated Statements of Cash Flows
Three and Twelve Months Ended December 31, 2012 and 2011
         
  Three months ended For the year ended
  December 31, December 31,    
(in thousands of dollars)  2012   2011   2012   2011 
         
Cash flows from operating activities:        
Net income  $ 9,771  $ 5,860  $ 34,262  $ 18,298
Adjustments to reconcile net income to net cash flows provided by operating activities-        
Depreciation and amortization of property and equipment  6,654  5,382  24,821  19,176
Amortization of intangible assets   84  84  335  335
Stock-based compensation expense  894  1,030  2,923  2,130
Deferred income taxes   2,490  (750)  2,687  (1,326)
Gain on sale of property and equipment   (312)  (446)  (1,019)  (1,174)
Other non-cash items   7  (34)  110  44
Changes in operating assets and liabilities        
Accounts receivable, net   (2,801)  10,092  (40,330)  (19,739)
Costs and estimated earnings in excess of billings on uncompleted contracts   1,334  6,552  (18,079)  (14,395)
Construction materials inventory   —   (1,249)  4,003  (4,003)
Receivable for insurance claims in excess of deductibles   (97)  (986)  (1,257)  (1,700)
Other assets   (3,998)  (258)  (1,619)  2,293
Accounts payable   (7,830)  13,673  11,067  35,062
Billings in excess of costs and estimated earnings on uncompleted contracts   2,524  (13,994)  7,644  (20,560)
Accrued self insurance   (46)  1,007  733  4,806
Other liabilities   (1,415)  9,160  3,718  11,147
Net cash flows provided by operating activities  7,259  35,123  29,999  30,394
Cash flows from investing activities:        
Proceeds from sale of property and equipment   327  498  1,204  1,306
Purchases of property and equipment   (5,155)  (8,180)  (37,249)  (42,342)
Net cash flows used in investing activities  (4,828)  (7,682)  (36,045)  (41,036)
Cash flows from financing activities:        
Repayments on term loan  —   (10,000)  —   (30,000)
Net borrowings (repayments) on revolving credit facility  —   —   (10,000)  10,000
Employee stock option transactions  445  —   1,309  1,290
Excess tax benefit from stock-based awards  350  (406)  524  1,266
Debt issuance costs  —   (569)  (13)  (569)
Other financing activities  —   —   38  45
Net cash flows provided by (used in) financing activities  795  (10,975)  (8,142)  (17,968)
Net increase (decrease) in cash and cash equivalents  3,226  16,466  (14,188)  (28,610)
Cash and cash equivalents:        
Beginning of period   16,599  17,547  34,013  62,623
End of period   $ 19,825  $ 34,013  $ 19,825  $ 34,013
         
MYR GROUP INC.
Unaudited Consolidated Selected Data and Net Income Per Share 
Three and Twelve Months Ended December 31, 2012 and 2011
         
  Three months ended For the year ended
   December 31,   December 31, 
  (in thousands, except per share data)   2012   2011   2012   2011 
         
 Summary Data:         
 Contract revenues   $ 247,763  $ 234,263  $ 998,959  $ 780,356
 Gross profit   $ 32,916  $ 24,625  $ 118,653  $ 85,566
 Income from operations   $ 15,641  $ 9,385  $ 55,762  $ 29,629
 Net income   $ 9,771  $ 5,860  $ 34,262  $ 18,298
         
 Total assets   $ 466,348  $ 412,568  $ 466,348  $ 412,568
 Total stockholders' equity (book value)   $ 254,690  $ 215,738  $ 254,690  $ 215,738
 Goodwill and intangible assets   $ 57,133  $ 57,468  $ 57,133  $ 57,468
 Total debt   $ —   $ 10,000  $ —   $ 10,000
         
 Per Share Data:         
 Income per common share (1):         
 -- Basic  $ 0.47  $ 0.29  $ 1.67  $ 0.90
 -- Diluted  $ 0.46  $ 0.28  $ 1.60  $ 0.87
 Weighted average number of common shares  and potential common shares outstanding (1):
 -- Basic  20,516  20,295  20,391  20,151
 -- Diluted  21,253  21,053  21,172  20,993
         
(1) MYR calculates net income per common share in accordance with ASC 260, Earnings Per Share.
 
MYR GROUP INC.
Unaudited Performance Measures and Reconciliation of Non-GAAP Measures
Three and Twelve Months Ended December 31, 2012 and 2011
         
  Three months ended For the year ended
   December 31,   December 31, 
 (in thousands, except per share data, ratios and percentages)   2012   2011   2012   2011 
         
 Financial Performance Measures (1):         
 EBITDA (2)   $ 22,303  $ 14,823  $ 80,696  $ 49,059
 EBITDA per Diluted Share (3)   $ 1.05  $ 0.70  $ 3.80  $ 2.34
 Book Value per Diluted Share (4)   $ 11.98  $ 10.25  $ 12.03  $ 10.28
 Tangible Book Value (5)   $ 197,557  $ 158,270  $ 197,557  $ 158,270
 Tangible Book Value per Diluted Share (6)   $ 9.29  $ 7.52  $ 9.33  $ 7.54
 Free Cash Flow (7)   $ 2,104  $ 26,943  $ (7,250)  $ (11,948)
 Asset Turnover (8)      2.42 2.05
 Return on Assets (9)      8.3% 4.8%
 Return on Equity (10)      15.9% 9.5%
 Debt Leverage Ratio (11)      0.00 0.05
         
 Reconciliation of Non-GAAP measures:         
 Reconciliation of Net Income to EBITDA:         
 Net income   $ 9,771  $ 5,860  $ 34,262  $ 18,298
 Interest expense (income), net   97  76  850  491
 Provision for income taxes   5,697  3,421  20,428  10,759
 Depreciation and amortization   6,738  5,466  25,156  19,511
 EBITDA (2)   $ 22,303  $ 14,823  $ 80,696  $ 49,059
         
 Reconciliation of Net Income per diluted share  to EBITDA per diluted share:     
 Net Income per share:   $ 0.46  $ 0.28  $ 1.60  $ 0.87
 Interest expense (income), net, per share   $ 0.00  $ 0.00  $ 0.04  $ 0.02
 Provision for income taxes per share   $ 0.27  $ 0.16  $ 0.97  $ 0.52
 Depreciation and amortization per share   $ 0.32  $ 0.26  $ 1.19  $ 0.93
 EBITDA per diluted share (3)   $ 1.05  $ 0.70  $ 3.80  $ 2.34
         
 Reconciliation of Book Value to Tangible Book Value:         
 Book value (total stockholders' equity)   $ 254,690  $ 215,738  $ 254,690  $ 215,738
 Goodwill and intangible assets  (57,133)  (57,468)  (57,133)  (57,468)
 Tangible Book Value (5)   $ 197,557  $ 158,270  $ 197,557  $ 158,270
          
Reconciliation of Book Value per diluted share to Tangible Book Value per diluted share:   
 Book value per diluted share:   $ 11.98  $ 10.25  $ 12.03  $ 10.28
 Goodwill and intangible assets per diluted share  (2.69) (2.73)  $ (2.70)  $ (2.74)
 Tangible Book Value per diluted share (6)   $ 9.29  $ 7.52  $ 9.33  $ 7.54
         
         
 Calculation of Free Cash Flow:         
 Net cash flow from operating activities   $ 7,259  $ 35,123  $ 29,999  $ 30,394
 Less: cash used in purchasing property and equipment   (5,155)  (8,180)  (37,249)  (42,342)
 Free Cash Flow (7)   $ 2,104  $ 26,943  $ (7,250)  $ (11,948)
         
(1)  These financial performance measures are provided as supplemental information to the financial statements. These measures are used by management to evaluate our past performance and prospects for future performance, to review measurements included in the financial covenants in our credit facility and to compare our results with those of our peers.  In addition, we believe that certain of the measures, such as book value, tangible book value, free cash flow, asset turnover, return on equity and debt leverage are measures that are monitored by sureties, lenders, lessors, suppliers and certain investors. Our calculation of each measure is described in the following notes; our calculation may not be the same as the calculations made by other companies.    
 
(2)  EBITDA is defined as earnings before interest, taxes, depreciation and amortization. EBITDA is not recognized under GAAP and does not purport to be an alternative to net income as a measure of operating performance or to net cash flows provided by operating activities as a measure of liquidity. EBITDA is a component of the debt to EBITDA covenant that we must report to our bank on a quarterly basis. In addition, management considers EBITDA a useful measure because it eliminates differences which are caused by different capital structures as well as different tax rates and depreciation schedules when comparing our measures to our peers' measures.
 
(3)  EBITDA per share is calculated by dividing EBITDA by the weighted average number of diluted shares outstanding for the period. EBITDA per diluted share is not recognized under GAAP and does not purport to be an alternative to income per diluted share.
 
(4)  Book value per share is calculated by dividing total stockholders' equity at the end of the period by the weighted average diluted shares outstanding for the period.
 
(5)  Tangible book value is calculated by subtracting goodwill and intangible assets outstanding at the end of the period from stockholders' equity outstanding at the end of the period. Tangible book value is not recognized under GAAP and does not purport to be an alternative to book value or stockholders' equity.
 
(6)  Tangible book value per share is calculated by dividing tangible book value at the end of the period by the weighted average number of diluted shares outstanding for the period. Tangible book value per diluted share is not recognized under GAAP and does not purport to be an alternative to income per diluted share.
 
(7)  Free cash flow, which is defined as cash flow provided by operating activities minus cash flow used in purchasing property and equipment, is not recognized under GAAP and does not purport to be an alternative to net income, cash flow from operations or the change in cash on the balance sheet. Management views free cash flow as a measure of operational performance, liquidity and financial health. 
 
(8)  Asset turnover is calculated by dividing the current period revenue by total assets at the beginning of the period.
 
(9)  Return on assets is calculated by dividing net income for the period by total assets at the beginning of the period.
 
(10)  Return on equity is calculated by dividing net income for the period by total stockholders' equity at the beginning of the period.
 
(11)  The debt leverage ratio is calculated by dividing total debt at the end of the period by total stockholders' equity at the end of the period.
CONTACT: MYR Group Inc. Contact:
         Paul J. Evans, Chief Financial Officer
         847-290-1891
         investorinfo@myrgroup.com
         
         Investor Contact:
         Philip Kranz, Dresner Corporate Services
         312-780-7240
         pkranz@dresnerco.com

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