Earning Date, Transcript Summary & Report

Backlog Growth and Investments: Our backlog increased to $2.6 billion, reflecting a healthy bidding environment and ongoing investments in infrastructure to meet growing electricity demand.

Market Growth Opportunities: Key market drivers such as system hardening, grid modernization, technology advancement, transit infrastructure improvement and decarbonization, all present opportunities for long-term growth across our business.

Utilities Capital Expenditures Growth: According to the Deloitte 2025 power and utilities industry outlook, utilities are responding to the dynamic energy landscape with record capital expenditures, reaching an estimated $174 billion in 2024, with forecasts projecting these expenditures to keep rising in the coming years.

C&I Segment Growth Opportunities: Our C&I segment continues to see robust, long-term opportunities with new and existing customers within our core markets of data centers, transportation, pharmaceuticals, healthcare and clean energy.

Data Center Capacity Demand: The C3 Group's 2024 North American electric transmission market forecast noted there are more than 170 hyperscale and colocation data center plans, requiring more than 45 gigawatts of capacity.

Gross Margin Improvement: Our gross margin was 10.4% for the fourth quarter of 2024 compared to 9.7% for the same period last year, primarily due to higher margins on certain completed projects and better-than-anticipated productivity.

Operating Income Margin Improvement: C&I operating income margin was 3.9% for the fourth quarter of 2024 compared to 2.1% for the same period last year, reflecting improved project execution and productivity.

SG&A Expense Reduction: Fourth quarter 2024 SG&A expenses were $57 million, a decrease of $3 million compared to the same period last year, indicating effective cost management.

Debt-to-EBITDA Ratio Stability: We have continued to maintain a strong funded debt-to-EBITDA leverage ratio of 0.63 times as of December 31, 2024, showcasing our financial stability.

Share Repurchase Authorization: Our Board of Directors recently authorized a new $75 million share repurchase program, reflecting confidence in our financial position and future growth.

Revenue Decline Analysis: Fourth quarter revenues decreased by 17% year-over-year, primarily due to clean energy projects reaching mechanical completion and a decrease in revenue on C&I fixed price contracts.

T&D Revenue Decline: T&D revenues fell by 24% compared to the same period last year, with a significant reduction of $136 million in revenue on transmission projects related to clean energy projects.

C&I Revenue Decline: C&I revenues decreased by 8% year-over-year, mainly due to a decline in revenue on fixed price contracts despite an increase in T&E contracts.

Operating Income Margin Decline: Operating income margin for T&D decreased to 6.7% from 7.2% year-over-year, primarily due to losses on clean energy projects and higher labor and contract-related costs.

Operating Income Margin Impact: C&I operating income margin was negatively impacted by a single project that reached substantial completion, which had a negative impact of 2.2% due to scope additions and increased labor costs.

Tax Rate Increase: The effective tax rate increased to 40.9% from 32.3% year-over-year, attributed to higher permanent difference items and unrecognized deferred tax assets.

Net Income Decline: Net income dropped to $16 million from $24 million year-over-year, with net income per diluted share falling to $0.99 from $1.43.

Operating Cash Flow Decline: Operating cash flow decreased to $21 million from $43 million year-over-year, primarily due to lower net income and timing of contingent compensation payments.

Free Cash Flow Decline: Free cash flow also decreased to $9 million from $22 million year-over-year, reflecting the decline in operating cash flow despite lower capital expenditures.