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 conducting operations through wholly owned subsidiaries. The Company performs construction services in two 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, 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 data centers, clean energy projects, airports, hospitals, hotels, commercial and industrial facilities, manufacturing plants, processing facilities, water/waste-water treatment facilities, mining facilities, intelligent transportation systems, roadway lighting, signalization, stadiums and 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 (loss), 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, 2025 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, 2025, included in the Company’s Annual Report on Form 10-K, which was filed with the SEC on February 25, 2026 (the "2025 Annual Report").
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, variable consideration inclusive of pending change orders and claims, shared savings, useful lives of property and equipment, insurance reserves, the recognition and measurement of current and deferred income taxes, including the measurement of certain tax positions, estimates surrounding stock-based compensation, 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.
The Company estimates costs to complete on fixed price contracts which are determined on an individual contract basis by evaluating each project’s status as of the balance sheet date, and using our historical experience with the level of effort required to complete the underlying project. Claims and change orders are measured based on our historical experience with individual customers and similar contracts, and are evaluated by management individually. The Company includes these estimated amounts of variable consideration to the extent that it is probable there will not be a significant reversal of revenue.
Some of the Company’s contracts may have contract terms that include variable consideration such as safety or performance bonuses or liquidated damages. The Company includes the estimated amount of variable consideration in the transaction price only to the extent that it is probable that a significant reversal in the amount of cumulative recognized revenue will not occur when the final outcome of the variable consideration is determined. In contracts in which a significant reversal may occur, the Company exercises restraint in recognizing revenue on variable consideration. The Company often enters into contracts that contain liquidated damage clauses. The Company does not include amounts associated with liquidated damage clauses until it is probable that liquidated damages will occur. These items are continually monitored by multiple levels of management throughout the reporting period.
As of March 31, 2026 and December 31, 2025, the Company had recognized revenues of $12.2 million and $23.5 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 March 31, 2026, net changes in estimates pertaining to certain projects increased consolidated gross margin by 0.8%, which resulted in increases in operating income of $8.5 million, net income of $5.6 million and diluted earnings per common share of $0.36. Additional discussion on the impact of these estimate changes can be found in Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Consolidated Results of Operations.”
During the three months ended March 31, 2025, net changes in estimates pertaining to certain projects decreased consolidated gross margin by 1.1%, which resulted in decreases in operating income of $8.7 million, net income of $6.3 million and diluted earnings per common share of $0.39.
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 intercompany loans that are not deemed long-term investment accounts are recorded in the “other income, net” line on the Company’s consolidated statements of operations. Foreign currency losses and gains, recorded in other income, net, for the three months ended March 31, 2026 and 2025 were $1.0 million and $0.3 million, respectively. Foreign currency translation gains and losses, arising from intercompany loans that are deemed long-term investment accounts, are recorded in the foreign currency translation adjustment line on the Company’s consolidated statements of comprehensive income.
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 will have minimal impact on its financial statements when adopted.
Recently Adopted Accounting Pronouncements
In July 2025, the FASB issued ASU 2025-05, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which introduces a practical expedient for estimating expected credit losses on current accounts receivable and current contract assets arising from transactions under Topic 606. The practical expedient allows entities to assume that current conditions as of the balance sheet date would not change for the remaining life of the asset when evaluating expected credit losses. This standard is effective for the Company for the annual and interim periods beginning after December 15, 2025, with early adoption permitted, and should be applied prospectively. The Company elected to adopt this practical expedient on January 1, 2026, on a prospective basis. This election did not have a material impact on our consolidated financial statements and related disclosures.
Recently Issued Accounting Pronouncements
In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires the disaggregation of certain expenses in the notes of the financials, to provide enhanced transparency into the expense captions presented on the face of the income statement. The guidance will require disclosure of certain costs and expenses on an interim and annual basis in the notes to the consolidated financial statements. The update is effective for annual reporting periods beginning after December 15, 2026 and interim periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The amendments in this pronouncement should be applied either (i) prospectively to financial statements issued for reporting periods after the effective date or (ii) retrospectively to any or all prior periods presented in the financial statements. The Company is currently evaluating the impact of the new standard on the Company’s consolidated financial statements and related disclosures.
In December 2025, the FASB issued ASU No. 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which is intended to clarify the applicability of interim disclosure requirements, provides additional guidance on the disclosures required in interim reporting periods, and introduces a principle requiring entities to disclose events occurring since the end of the most recent annual reporting period that have a material impact on the entity. The update is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The amendments in this pronouncement can be applied either prospectively or retrospectively to any or all prior periods presented in the financial statements. The Company is currently evaluating the impact of the new standard on the Company’s consolidated financial statements and related disclosures.
2. 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. These contracts frequently include retention provisions contained in each contract. Retainage amounts are reflected in contract assets or contract liabilities depending on the net contract position of the particular 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 March 31, 2026 and December 31, 2025, respectively.
Contract assets consisted of the following:
| | | | | | | | | | | | | | | | |
| (in thousands) | | March 31,
2026 | | December 31,
2025 | | |
| Unbilled revenue, net | | $ | 152,621 | | | $ | 160,543 | | | |
| Contract retainages, net | | 71,642 | | | 81,223 | | | |
| Contract assets, net | | $ | 224,263 | | | $ | 241,766 | | | |
The Company’s consolidated balance sheets present contract liabilities that contain deferred revenue, an accrual for contracts in a loss provision and retainage receivables.
Contract liabilities consisted of the following:
| | | | | | | | | | | | | | | | |
| (in thousands) | | March 31,
2026 | | December 31,
2025 | | |
| Deferred revenue | | $ | 371,267 | | | $ | 386,071 | | | |
| Accrued loss provision | | 15,871 | | | 13,084 | | | |
| Less, retainage receivables | | (105,618) | | | (98,595) | | | |
| Contract liabilities, net | | $ | 281,520 | | | $ | 300,560 | | | |
The following table provides information about contract assets and contract liabilities from contracts with customers:
| | | | | | | | | | | | | | | | | | | | |
| (in thousands) | | March 31,
2026 | | December 31,
2025 | | Change |
| Contract assets, net | | $ | 224,263 | | | $ | 241,766 | | | $ | (17,503) | |
| Contract liabilities, net | | (281,520) | | | (300,560) | | | 19,040 | |
| Net contract assets (liabilities) | | $ | (57,257) | | | $ | (58,794) | | | $ | 1,537 | |
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 was $72.0 million for the three months ended March 31, 2026. The amounts of revenue recognized in the period that were included in the opening contract liability balances was $58.9 million for the three months ended March 31, 2025. This revenue consists primarily of work performed on previous billings to customers.
The net liability position for contracts in process consisted of the following:
| | | | | | | | | | | | | | |
| (in thousands) | | March 31,
2026 | | December 31,
2025 |
| Costs and estimated earnings on uncompleted contracts | | $ | 8,240,164 | | | $ | 8,368,365 | |
| Less: billings to date | | 8,458,810 | | | 8,593,893 | |
| | $ | (218,646) | | | $ | (225,528) | |
The net liability position for contracts in process is included within the contract asset and contract liability in the accompanying consolidated balance sheets as follows:
| | | | | | | | | | | | | | |
| (in thousands) | | March 31,
2026 | | December 31,
2025 |
| Unbilled revenue, net | | $ | 152,621 | | | $ | 160,543 | |
| Deferred revenue, net | | (371,267) | | | (386,071) | |
| | $ | (218,646) | | | $ | (225,528) | |
3. Lease Obligations
From time to time, the Company enters into noncancelable 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 less than one to twelve years, some of which may include options to extend the leases for up to ten 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 March 31, 2026, 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 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:
| | | | | | | | | | | | | | | | | | | | |
| | | | March 31,
2026 | | December 31,
2025 |
| (in thousands) | | Classification on the Consolidated Balance Sheet | | |
| Assets | | | | | | |
| Operating lease right-of-use assets | | Operating lease right-of-use assets | | $ | 50,357 | | | $ | 42,448 | |
| Finance lease right-of-use assets | | Property and equipment, net of accumulated depreciation | | 1,738 | | | 1,910 | |
| Total right-of-use lease assets | | | | $ | 52,095 | | | $ | 44,358 | |
| | | | | | |
| Liabilities | | | | | | |
| Current | | | | | | |
| Operating lease obligations | | Current portion of operating lease obligations | | $ | 12,751 | | | $ | 13,019 | |
| Finance lease obligations | | Current portion of finance lease obligations | | 799 | | | 804 | |
| Total current obligations | | | | 13,550 | | | 13,823 | |
| Non-current | | | | | | |
| Operating lease obligations | | Operating lease obligations, net of current maturities | | 37,598 | | | 29,429 | |
| Finance lease obligations | | Finance lease obligations, net of current maturities | | 998 | | | 1,220 | |
| Total non-current obligations | | | | 38,596 | | | 30,649 | |
| Total lease obligations | | | | $ | 52,146 | | | $ | 44,472 | |
The following is a summary of the lease terms and discount rates:
| | | | | | | | | | | |
| March 31,
2026 | | December 31,
2025 |
| Weighted-average remaining lease term - finance leases | 2.3 years | | 2.5 years |
| Weighted-average remaining lease term - operating leases | 5.1 years | | 3.7 years |
| Weighted-average discount rate - finance leases | 3.9 | % | | 3.9 | % |
| Weighted-average discount rate - operating leases | 4.0 | % | | 4.0 | % |
The following is a summary of certain information related to the lease costs for finance and operating leases:
| | | | | | | | | | | | | | | | | | |
| (in thousands) | | Three months ended
March 31, | | |
| | 2026 | | 2025 | | | | |
| Lease cost: | | | | | | | | |
| Finance lease cost: | | | | | | | | |
| Amortization of right-of-use assets | | $ | 143 | | | $ | 249 | | | | | |
| Interest on lease liabilities | | 19 | | | 29 | | | | | |
| Operating lease cost | | 4,908 | | | 4,262 | | | | | |
| | | | | | | | |
| Variable lease costs | | 126 | | | 104 | | | | | |
| Total lease cost | | $ | 5,196 | | | $ | 4,644 | | | | | |
The following is a summary of other information and supplemental cash flow information related to finance and operating leases:
| | | | | | | | | | | | | | |
| | Three months ended March 31, |
| (in thousands) | | 2026 | | 2025 |
| Other information: | | | | |
| Cash paid for amounts included in the measurement of lease liabilities | | | | |
| Operating cash flows used for operating leases | | $ | 4,882 | | | $ | 4,242 | |
| Right-of-use asset obtained in exchange for new operating lease obligations | | $ | 12,268 | | | $ | 4,669 | |
| | | | |
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 March 31, 2026 were as follows:
| | | | | | | | | | | | | | | | | | | | |
| (in thousands) | | Finance
Lease Obligations | | Operating Lease
Obligations | | Total
Lease
Obligations |
Remainder of 2026 | | $ | 641 | | | $ | 14,015 | | | $ | 14,656 | |
| 2027 | | 855 | | | 13,568 | | | 14,423 | |
| 2028 | | 382 | | | 11,501 | | | 11,883 | |
| 2029 | | — | | | 8,422 | | | 8,422 | |
| 2030 | | — | | | 4,374 | | | 4,374 | |
| 2031 | | — | | | 3,063 | | | 3,063 | |
| Thereafter | | — | | | 7,848 | | | 7,848 | |
| Total minimum lease payments | | 1,878 | | | 62,791 | | | 64,669 | |
| Financing component | | (81) | | | (12,442) | | | (12,523) | |
| Net present value of minimum lease payments | | 1,797 | | | 50,349 | | | 52,146 | |
| Less: current portion of finance and operating lease obligations | | (799) | | | (12,751) | | | (13,550) | |
| Long-term finance and operating lease obligations | | $ | 998 | | | $ | 37,598 | | | $ | 38,596 | |
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 ongoing operating leases for facilities that were entered into or extended with third-party companies that, are or were, 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. Lease expense associated with these leases was $0.7 million for the three months ended March 31, 2026 and $0.6 million for the three months ended March 31, 2025. As of March 31, 2026, the minimum lease payments required under these leases totaled $6.4 million, which are due over the next 3.4 years.
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 March 31, 2026 and December 31, 2025, the Company determined that the carrying value of cash and cash equivalents approximated fair value based on Level 1 inputs. As of March 31, 2026 and December 31, 2025, the fair value of the Company’s long-term debt and finance lease obligations was based on Level 2 inputs. The Company’s long-term debt was based on variable and fixed interest rates at March 31, 2026 and December 31, 2025, 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 value of the Company’s finance lease obligations also approximated fair value.
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 March 31, 2026 | | Outstanding Balance as of December 31, 2025 |
| Credit Agreement | | | | | | | | | | | | |
| Revolving loans | | 5/31/2023 | | Variable | | Variable | | 5 | | $ | — | | | $ | 47,414 | |
| | | | | | | | | | | | |
| Equipment Notes | | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| Equipment Note 10 | | 8/26/2022 | | 4.32% | | Semi-annual | | 5 | | 9,361 | | | 11,605 | |
| Other equipment note | | 4/11/2022 | | 4.55% | | Monthly | | 5 | | 15 | | | 18 | |
| | | | | | | | | | 9,376 | | | 11,623 | |
| Total debt | | | | | | | | | | 9,376 | | | 59,037 | |
| Less: current portion of long-term debt | | | | | | | | (4,652) | | | (4,554) | |
| Long-term debt | | | | | | | | | | $ | 4,724 | | | $ | 54,483 | |
Credit Agreement
On May 31, 2023, the Company entered into a five-year third 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. that provides for a $490 million revolving credit facility (the “Facility”), subject to certain financial covenants as defined in the Credit Agreement. The Facility allows for revolving loans in Canadian dollars and other non-US currencies, up to the U.S. dollar equivalent of $150 million. Up to $75 million of the Facility may be used for letters of credit, with an additional $75 million available for letters of credit, subject to the sole discretion of each issuing bank. The Facility also allows for $15 million to be used for swingline loans. 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. The Credit Agreement provides for customary events of default. 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 to refinance existing indebtedness, and to provide for future working capital, capital expenditures, acquisitions 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 0.25% to 1.00%; or (2) the Term Benchmark Rate (as defined in the Credit Agreement) plus an applicable margin ranging from 1.25% to 2.00%. The applicable margin is determined based on the Company’s Net Leverage Ratio (as defined in the Credit Agreement). Letters of credit issued under the Facility are subject to a letter of credit fee of 1.25% to 2.00% for non-performance letters of credit or 0.625% to 1.00% for performance letters of credit, based on the Company’s Net Leverage Ratio. The Company is subject to a commitment fee of 0.20% to 0.30%, based on the Company’s Net Leverage Ratio, on any unused portion of the Facility. The Credit Agreement restricts certain types of payments when the Company’s Net Leverage Ratio, after giving pro forma effect thereto, exceeds 2.75. The weighted average interest rate on borrowings outstanding on the Facility was 4.70% and 5.55%, per annum, for the three months ended March 31, 2026 and 2025, respectively.
Under the Credit Agreement, the Company is subject to certain financial covenants including a maximum Net Leverage Ratio of 3.0 and a minimum Interest Coverage Ratio (as defined in the Credit Agreement) of 3.0. 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 March 31, 2026.
As of March 31, 2026, the Company had no borrowings outstanding under the Facility and letters of credit outstanding under the Facility of $29.5 million related to the Company's payment obligation under its insurance programs.
As of December 31, 2025, the Company had $47.4 million in borrowings outstanding under the Facility and letters of credit outstanding under the Facility of $34.3 million, including $34.2 million related to the Company's payment obligation under its insurance programs and $0.1 million related to contract performance obligations.
The Company had remaining deferred debt issuance costs related to the Facility totaling $1.1 million and $1.2 million as of March 31, 2026 and December 31, 2025, respectively. 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 Facility.
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.
As of March 31, 2026, the Company had one Equipment Note outstanding under the Master Loan Agreements that is collateralized by equipment and vehicles owned by the Company. As of March 31, 2026, the Company had one 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 March 31, 2026:
| | | | | | | | |
| (in thousands) | | Future
Equipment Notes
Principal Payments |
Remainder of 2026 | | $ | 2,307 | |
| 2027 | | 7,069 | |
| | |
| | |
| | |
| | |
| | |
| Total future principal payments | | 9,376 | |
| Less: current portion of equipment notes | | (4,652) | |
| Long-term principal obligations | | $ | 4,724 | |
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 guarantee not-to-exceed a maximum price.
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 four 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.
In the first quarter of 2026, the Company updated its presentation of disaggregated revenue in the T&D segment to no longer present disaggregated revenue by market type. This update was made to better align external reporting with how management evaluates the effect of economic factors on the nature, amount, timing and uncertainty of revenue and cash flows. Additional information on the Company’s segments is provided in Note 10–Segment Information.
The components of the Company’s revenue by contract type for the three months ended March 31, 2026 and 2025 were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three months ended March 31, 2026 |
| | T&D | | C&I | | Total |
| (dollars in thousands) | | Amount | | Percent | | Amount | | Percent | | Amount | | Percent |
| Fixed price | | $ | 150,178 | | | 27.8 | % | | $ | 394,721 | | | 85.9 | % | | $ | 544,899 | | | 54.5 | % |
| Unit price | | 218,211 | | | 40.3 | | | 12,930 | | | 2.8 | | | 231,141 | | | 23.1 | |
| T&E | | 172,581 | | | 31.9 | | | 51,759 | | | 11.3 | | | 224,340 | | | 22.4 | |
| | | | | | | | | | | | |
| | $ | 540,970 | | | 100.0 | % | | $ | 459,410 | | | 100.0 | % | | $ | 1,000,380 | | | 100.0 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three months ended March 31, 2025 |
| | T&D | | C&I | | Total |
| (dollars in thousands) | | Amount | | Percent | | Amount | | Percent | | Amount | | Percent |
| Fixed price | | $ | 173,450 | | | 37.6 | % | | $ | 293,805 | | | 79.0 | % | | $ | 467,255 | | | 56.0 | % |
| Unit price | | 152,102 | | | 32.9 | | | 17,667 | | | 4.8 | | | 169,769 | | | 20.4 | |
| T&E | | 136,217 | | | 29.5 | | | 60,379 | | | 16.2 | | | 196,596 | | | 23.6 | |
| | | | | | | | | | | | |
| | $ | 461,769 | | | 100.0 | % | | $ | 371,851 | | | 100.0 | % | | $ | 833,620 | | | 100.0 | % |
Remaining Performance Obligations
As of March 31, 2026, the Company had $2.53 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. The timing of when remaining performance obligations are recognized is evaluated quarterly and is largely driven by the estimated start date and duration of the underlying projects.
The following table summarizes the amount of remaining performance obligations as of March 31, 2026 that the Company expects to be realized and the amount of the remaining performance obligations that the Company reasonably estimates will be recognized within the next twelve months, and the amount estimated to be recognized after the next twelve months.
| | | | | | | | | | | | | | | | | | | | |
| | Remaining Performance Obligations at March 31, 2026 |
| (in thousands) | | Total | | Amount estimated to be recognized within 12 months | | Amount estimated to be recognized after 12 months |
| T&D | | $ | 674,758 | | | $ | 597,304 | | | $ | 77,454 | |
| C&I | | 1,852,094 | | | 1,624,685 | | | 227,409 | |
| Total | | $ | 2,526,852 | | | $ | 2,221,989 | | | $ | 304,863 | |
The Company estimates approximately 95% or more of the remaining performance obligations will be recognized within twenty-four months, including approximately 85% of the remaining performance obligations estimated to be recognized within twelve months, although the timing of the Company’s performance is not always under its control. The timing of when remaining performance obligations are recognized by the Company can vary considerably and is impacted by multiple variables including, but not limited to: changes in the estimated versus actual start time of a project; the availability of labor, equipment and materials; changes in project workflow; weather; project delays and accelerations; and the timing of final contract settlements. 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.”
7. Income Taxes
The U.S. federal statutory tax rate was 21% for each of the three months ended March 31, 2026 and 2025. The Company’s effective tax rate for the three months ended March 31, 2026 was 26.9% of pretax income compared to the effective tax rate for the three months ended March 31, 2025 of 28.9%.
The difference between the U.S. federal statutory tax rate and the Company’s effective tax rates for the three months ended March 31, 2026 was primarily due to state income taxes and the impact of the net CFC tested income (“NCTI”) 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 rates for the three months ended March 31, 2025 was primarily due to permanent difference items and state income taxes.
The Company has recorded a liability for unrecognized tax benefits of approximately $0.5 million and $0.4 million as of March 31, 2026 and December 31, 2025, respectively, which were included in other liabilities in the accompanying consolidated balance sheets.
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 months ended March 31, 2026 and 2025.
The Company is subject to taxation in various jurisdictions. The Company’s 2021 through 2024 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 2020 through 2024. The Company’s 2020 through 2024 Canadian tax returns are subject to examination by the Canadian Revenue Agency.
8. Commitments and Contingencies
Purchase Commitments
As of March 31, 2026, the Company had approximately $59.6 million in outstanding purchase orders for certain construction equipment, with cash payments scheduled to occur in 2026 and 2027.
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. The Company’s health benefit plans are subject to stop-loss limits of up to $0.3 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.
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 March 31, 2026, an aggregate of approximately $2.70 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 $899.0 million as of March 31, 2026.
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, liabilities and related litigation. The Company is not aware of any material unrecorded liabilities for asserted claims in connection with these indemnification obligations.
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 status of some multi-employer pension plans to which its subsidiaries contribute have been classified as “critical”, 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 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 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 aggregate, would be expected to have a material adverse effect on the Company’s financial condition, results of operations or cash flows.
9. Stock-Based Compensation
The Company maintains an equity compensation plan under which stock-based compensation has been granted: the 2017 Long-Term Incentive Plan (Amended and Restated as of April 24, 2024) (the “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 awards, (g) phantom stock, (h) stock bonuses, (i) dividend equivalents, or (j) any combination of such grants. The Company has outstanding grants of time-vested stock awards in the form of restricted stock units and internal metric-based and market-based performance stock units.
During the three months ended March 31, 2026, the Company granted time-vested stock awards covering 30,487 shares of common stock under the LTIP, which vest ratably over three years for employee awards, at a weighted average grant date fair value of $274.39. During the three months ended March 31, 2026, time-vested stock awards covering 43,852 shares of common stock vested at a weighted average grant date fair value of $135.34.
During the three months ended March 31, 2026, the Company granted 28,718 performance share awards under the LTIP at target, which will cliff vest, if earned, on December 31, 2028, at a weighted average grant date fair value of $319.59. 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 financial and other 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.
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.
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.
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 two reporting segments, each a separate operating segment, which are referred to as T&D and C&I. Operating segments are defined as components of an enterprise about which separate financial information is evaluated regularly by the chief operating decision maker (“CODM”) in deciding how to allocate resources and in assessing performance. The Company’s CODM is the Chief Executive Officer. The CODM uses segment revenue and income from operations, over multiple time periods, along with a comparison to the corresponding budgeted and prior year periods, as the primary basis for assessing segment performance and deciding how to allocate resources. Income from operations is the Company’s reported measure of segment profit or loss, as summarized in the table below, and excludes general corporate expenses. General corporate expenses reflect items that are generally viewed as Company-wide operating costs by the CODM and include items such as corporate facility and staffing costs, which includes safety costs, professional fees, IT expenses and certain management fees. The CODM also considers many other factors, such as contract terms, individual project performance, project location and other items, to support the CODM’s assessment of segment performance and resource allocation decisions.
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, clean energy projects and electric vehicle charging infrastructure. The T&D segment also provides emergency restoration services. 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 electric vehicle charging infrastructure. Typical C&I contracts cover electrical contracting services for data centers, clean energy projects, airports, hospitals, hotels, commercial and industrial facilities, manufacturing plants, processing facilities, water/waste-water treatment facilities, mining facilities, transportation control and management systems and stadiums. 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:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended March 31, 2026 |
| (in thousands) | | T&D | | C&I | | General Corporate | | Consolidated |
| Contract revenues | | $ | 540,970 | | | $ | 459,410 | | | $ | — | | | $ | 1,000,380 | |
Operating costs (1) | | 488,760 | | | 422,206 | | | 24,692 | | | 935,658 | |
| Income from operations | | 52,210 | | | 37,204 | | | (24,692) | | | 64,722 | |
| Other income (expense): | | | | | | | | |
| Interest income | | | | | | | | 910 | |
| Interest expense | | | | | | | | (659) | |
| Other expense, net | | | | | | | | (948) | |
| Income before provision for income taxes | | | | | | | | 64,025 | |
| Income tax expense | | | | | | | | 17,225 | |
| Net income | | | | | | | | $ | 46,800 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended March 31, 2025 |
| (in thousands) | | T&D | | C&I | | General Corporate | | Consolidated |
| Contract revenues | | $ | 461,769 | | | $ | 371,851 | | | $ | — | | | $ | 833,620 | |
Operating costs (1) | | 425,548 | | | 354,474 | | | 19,308 | | | 799,330 | |
| Income (loss) from operations | | 36,221 | | | 17,377 | | | (19,308) | | | 34,290 | |
| Other income (expense): | | | | | | | | |
| Interest income | | | | | | | | 191 | |
| Interest expense | | | | | | | | (1,414) | |
| Other expense, net | | | | | | | | (300) | |
| Income before provision for income taxes | | | | | | | | 32,767 | |
| Income tax expense | | | | | | | | 9,459 | |
| Net income | | | | | | | | $ | 23,308 | |
(1) Operating costs include T&D, C&I and general corporate portion of contract costs, selling, general and administrative expenses, amortization of intangible assets and gain on sale of property and equipment. The expenses found in these other segment items are generally viewed as operating costs by the CODM and are not considered individually significant segment reporting items.
The Company does not identify capital expenditures and total assets by segment in its internal financial reports due in part to the shared use of a centralized fleet of vehicles and specialized equipment. Identifiable assets, consisting of contract receivables, contract assets, construction materials inventory, goodwill and intangibles. As of March 31, 2026 and December 31, 2025, there were $158.1 million and $169.0 million, respectively, of identifiable assets attributable to Canadian operations. The table below reflects the identifiable assets for each segment.
| | | | | | | | | | | | | | |
| (in thousands) | | March 31, 2026 | | December 31, 2025 |
| T&D | | $ | 550,378 | | | $ | 553,597 | |
| C&I | | 490,383 | | | 474,791 | |
| General Corporate | | 632,663 | | | 615,691 | |
| | $ | 1,673,424 | | | $ | 1,644,079 | |
An allocation of total depreciation, including depreciation of shared construction equipment, and amortization to each segment is as follows:
| | | | | | | | | | | | | | | | |
| | For the Three Months Ended March 31, |
| (in thousands) | | 2026 | | 2025 | | |
| | | | | | |
| T&D | | $ | 15,729 | | | $ | 14,038 | | | |
| C&I | | 2,034 | | | 2,155 | | | |
| | $ | 17,763 | | | $ | 16,193 | | | |
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 by the weighted average number of common shares outstanding during the period, and diluted earnings per share are computed by dividing net income 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.
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
March 31, | | |
| (in thousands, except per share data) | | 2026 | | 2025 | | | | |
| Numerator: | | | | | | | | |
| Net income | | $ | 46,800 | | | $ | 23,308 | | | | | |
| | | | | | | | |
| Denominator: | | | | | | | | |
| Weighted average common shares outstanding | | 15,539 | | | 15,994 | | | | | |
| Weighted average dilutive securities | | 137 | | 62 | | | | |
| Weighted average common shares outstanding, diluted | | 15,676 | | | 16,056 | | | | | |
| | | | | | | | |
| Income per common share: | | | | | | | | |
| Basic | | $ | 3.01 | | | $ | 1.46 | | | | | |
| Diluted | | $ | 2.99 | | | $ | 1.45 | | | | | |
For the three months ended March 31, 2026 and 2025, certain common stock equivalents were excluded from the calculation of dilutive securities because their inclusion would have been anti-dilutive.
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
March 31, | | |
| (in thousands) | | 2026 | | 2025 | | | | |
| Time-vested stock awards | | 30 | | | — | | | | | |
| Performance awards | | 29 | | | 30 | | | | | |
Share Repurchases
During the three months ended March 31, 2026, the Company repurchased 24,666 shares of stock, for approximately $6.5 million, from its employees to satisfy tax obligations on shares vested under the LTIP. During the three months ended March 31, 2025, the Company repurchased 18,866 shares of stock, for approximately $2.5 million, from its employees to satisfy tax obligations on shares vested under the LTIP.