MYR GROUP INC. - Quarter Report: 2009 September (Form 10-Q)

Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

Commission file number: 1-08325

MYR GROUP INC.
(Exact name of registrant as specified in its charter)

        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 (the "Exchange Act") 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 ý    No o

        Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes o    No o

        Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 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 o No ý

        As of November 6, 2009 there were 19,803,921 outstanding shares of the registrant's $0.01 par value common stock.

WEB SITE ACCESS TO COMPANY'S REPORTS

MYR Group Inc.'s internet Web site address is www.myrgroup.com. Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to section 13(a) or 15(d) of the Exchange Act will be available free of charge through our Web site as soon as reasonably practicable after they are electronically filed with, or furnished to, the Securities and Exchange Commission ("SEC").

INDEX

        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.

i

Table of Contents

MYR GROUP INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

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

1

Table of Contents

MYR GROUP INC.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share data)

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

2

Table of Contents

MYR GROUP INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

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

3

Table of Contents

MYR GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

1. Organization and Business

        MYR Group Inc. (the "Company") consists of the following wholly-owned subsidiaries: The L. E. Myers Co., a Delaware corporation; Hawkeye Construction, Inc., an Oregon corporation; Harlan Electric Company, a Michigan corporation; Sturgeon Electric Company, Inc., a Michigan corporation; MYR Transmission Services, Inc., a Delaware corporation; ComTel Technology Inc., a Colorado corporation; MYRpower, Inc., a Delaware corporation and Great Southwestern Construction, Inc., a Colorado corporation.

        The Company performs construction services in two business segments: Transmission and Distribution ("T&D"), and Commercial and Industrial ("C&I"). T&D customers include more than 125 electric utilities, cooperatives and municipalities nationwide. The Company's broad range of services includes design, engineering, procurement, construction, upgrade, and maintenance and repair services with a particular focus on construction, maintenance and repair throughout the continental United States. The Company also provides C&I electrical contracting services to facility owners and general contractors in the western United States.

2. Basis of Presentation

Interim Consolidated Financial Information

        The accompanying consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim financial reporting and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the financial statements do not include all the disclosures required by U.S. GAAP for complete financial statements. In the opinion of management, the accompanying consolidated financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to state fairly the financial condition of the Company as of September 30, 2009, and the results of operations, and cash flows for the three and nine months ended September 30, 2008 and 2009. The results of operations for the three and nine months ended September 30, 2009 are not necessarily indicative of the results for the full year or the results for any future periods. The consolidated balance sheet as of December 31, 2008 has been derived from the audited financial statements as of that date. These financial statements should be read in conjunction with the audited financial statements and related notes for the year ended December 31, 2008, included in the Company's annual report on Form 10-K.

Use of Estimates

        The preparation of financial statements in conformity with accounting U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the period reported. The most significant estimates are related to the accounts receivable reserve, estimates to complete on contracts, insurance reserves, tax reserves, recoverability of goodwill and intangibles, and estimates surrounding stock-based compensation. Actual results could differ from these estimates.

4

Table of Contents

MYR GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share data)

2. Basis of Presentation (Continued)

Recently Issued Accounting Pronouncements

        In June 2009, the Financial Accounting Standards Board ("FASB") issued revised accounting guidance to establish one single source of authoritative U.S. GAAP, which is referred to as the FASB Accounting Standards Codification ("ASC"). This standard is to be applied by nongovernmental entities, but it is not intended to change the existing accounting for public companies. The new guidance is effective for interim and annual reporting periods ending after September 15, 2009. The Company adopted this standard on July 1, 2009 and has modified all applicable U.S. GAAP references to the ASC accordingly.

        In December 2007, the FASB issued an accounting standard that required an acquiring entity to recognize all the assets acquired and liabilities assumed in a transaction at the acquisition-date fair value of the assets and liabilities involved, with limited exceptions. According to the Business Combinations Topic of the ASC, this standard applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The adoption of this standard on January 1, 2009 did not have an impact on the Company's consolidated financial condition, results of operations or cash flows.

        In February 2008, the FASB issued a modification to an existing accounting standard, as outlined in the Fair Value Measurements and Disclosures Topic of the ASC. This modification deferred the effective date of certain fair value measurement provisions outlined in the existing standard to fiscal years beginning after November 15, 2008, and interim periods within those fiscal years, for all nonfinancial assets and nonfinancial liabilities. The adoption of this standard modification on January 1, 2009 did not have an impact on the Company's consolidated financial condition, results of operations or cash flows.

        In April 2008, the FASB issued a new accounting standard intended to improve the consistency between the useful life of a recognized intangible asset and the period of expected cash flows used to measure the fair value of the asset. This standard, as outlined in the Intangibles—Goodwill and Other Topic of the ASC, became effective for fiscal years and interim periods beginning after December 15, 2008. The adoption of this standard on January 1, 2009 did not have an impact on the Company's consolidated financial condition, results of operations or cash flows.

        In April 2009, the FASB issued another modification to the accounting standards outlined in the Fair Value Measurements and Disclosures Topic of the ASC. This modification provided additional guidance for estimating fair value when certain circumstances exist where the volume and level of activity for an asset or liability have significantly decreased. It also included guidance on identifying circumstances that would indicate when a transaction is not orderly. This standard modification became effective for fiscal years and interim periods ending after June 15, 2009. The adoption of this standard modification did not have an impact on the Company's consolidated financial condition, results of operations or cash flows.

        Also in April 2009, the FASB issued a modification to an existing accounting standard, as outlined in the Financial Instruments Topic of the ASC, which extended the existing fair value disclosure requirements of financial instruments to interim financial statements of publicly traded companies. This standard modification became effective for interim periods ending after June 15, 2009. Although the adoption of this standard modification did not have an impact on the Company's consolidated financial

5

Table of Contents

MYR GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share data)

2. Basis of Presentation (Continued)

condition, results of operations or cash flows, there were impacts to the Company's financial statement disclosures.

        In May 2009, the FASB issued an accounting standard which established general guidelines of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued. This standard, as described in the Subsequent Events Topic of the ASC, requires the disclosure of the date through which an entity has evaluated subsequent events and the basis for that date. This standard became effective for fiscal years and interim periods ending after June 15, 2009. Although, the adoption of this standard did not have an impact on the Company's consolidated financial condition, results of operations or cash flows, there were impacts to the Company's financial statement disclosures.

        In June 2009, the FASB issued an amendment to an existing accounting standard, as outlined in the Transfers and Servicing Topic of the ASC, which addresses the accounting for the transfers of financial assets. This amendment is intended to improve the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial reports about a transfer of financial assets, as well as a transferor's continuing involvement, if any, in the transferred financial assets. Although this amendment has not yet been codified in the ASC, it is effective for fiscal years and interim periods beginning after November 15, 2009. The adoption of this amendment is not expected to have a material impact on the Company's consolidated financial condition, results of operations or cash flows.

        In August 2009, the FASB issued an accounting standard update to the Fair Value Measurements and Disclosures Topic of the ASC which focuses on the fair value measurement of liabilities. This update provides clarification on how an entity should measure fair value of a liability when a quoted price in an active market is not available for an identical liability. This update is effective for the first reporting period (including interim periods) beginning after issuance. The adoption of this update is not expected to have a material impact on the Company's consolidated financial condition, results of operations or cash flows.

3. Fair Value Measurements

        The accounting guidance provided by the Fair Value Measurements and Disclosures Topic of the ASC defines fair value, establishes methods used to measure fair value and expands disclosure requirements about fair value measurements. The fair value accounting guidance establishes a 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 September 30, 2009, the carrying value of cash and cash equivalents, accounts receivable and payable, accrued liabilities, and certain other financial assets and liabilities approximates fair value due to the short maturities of these instruments.

6

Table of Contents

MYR GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share data)

3. Fair Value Measurements (Continued)

        As of September 30, 2009, the Company held cash equivalents that are subject to the disclosure requirements of the fair value accounting guidance. These items include money market funds held in deposit at a national bank with a carrying value of $32,156, which was equal to the fair value at September 30, 2009 based upon Level 1 inputs.

        The carrying amount reported in the consolidated balance sheet as of September 30, 2009 for long term debt is $30,000. Using a discounted cash flow technique that incorporates a market interest rate adjusted for risk profile based upon Level 3 inputs, the Company has estimated the fair value of its debt to be $29,523 as of September 30, 2009.

4. Supplemental Cash Flows

        Supplemental disclosures of cash flow information for the three and nine months ended September 30, 2008 and 2009 are as follows:

        As of December 31, 2008, the Company had purchased $4,290 of property and equipment for which payment was pending, all of which was paid during the nine months ended September 30, 2009. As of September 30, 2009, the Company recorded the acquisition of additional property and equipment of approximately $155 for which payment was pending.

5. Contracts in Process

        The net asset (liability) position for contracts in process consisted of the following at December 31, 2008 and September 30, 2009:

7

Table of Contents

MYR GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share data)

5. Contracts in Process (Continued)