MYR Group Inc. (MYRG) Q3 2014 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to the MYR Group Third Quarter 2014 Earnings Results Call. [Operator Instructions] As a reminder, this conference call will be recorded. I would now like to introduce your host for today's conference, Mr. Philip Kranz of Dresner. You may begin, sir.

Thank you, and good morning, everyone. I'd like to welcome you to the MYR Group conference call to discuss the company's third quarter results for 2014, which were reported yesterday. Joining us on today's call are Bill Koertner, President and Chief Executive Officer; Paul Evans, Vice President and Chief Financial Officer; and Rick Swartz, Senior Vice President and Chief Operating Officer. If you did not receive yesterday's press release, please contact Dresner Corporate Services at (312) 726-3600, and we will send you a copy, or you can go to www.myrgroup.com, where a copy is available under the Investor Relations tab. Also, a replay of today's call will be available until Wednesday, November 12, 2014, at 11:59 p.m. Eastern time by dialing (855) 859-2056 or (404) 537-3406 and entering the conference ID 20931489. Before we begin, I want to remind you this discussion may contain forward-looking statements. Any such statements are based upon information available to MYR Group management as of this date, and MYR Group assumes no obligation to update any such forward-looking statements. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Accordingly, these statements are no guarantee of future performance. These risks and uncertainties are discussed in the company's annual report, quarterly report on Form 10-Q for the third quarter of 2014 and in yesterday's press release. Certain non-GAAP financial information will be discussed on the call today. A reconciliation of this non-GAAP information to the most comparable GAAP measure is set forth in yesterday's press release. With that said, let me turn the call over to Bill Koertner

Good morning, everyone. Welcome to our third quarter 2014 conference call to discuss financial and operational results. I will start by providing a brief summary of the third quarter results and then turn the call over to Paul Evans, our CFO, for a more detailed financial review. Following Paul's discussion, Rick Swartz, our Chief Operating Officer, will provide an industry and MYR Group operational update for the quarter. I will then conclude with some closing remarks and open the call up for your comments and questions. Our third quarter 2014 results came in strong with revenue growth of 6.7% driven by continued strength in our commercial and industrial segment, where revenues increased 50% over the same quarter last year. This marks the 4th consecutive year-over-year quarterly revenue increase. Backlog was also a bright spot for the company. At the end of the third quarter 2014, it grew to $409 million, or by approximately $11 million, versus the second quarter of 2014. This marks the third consecutive quarter of growth. In particular, bookings within our T&D segment were up by nearly $24 million in the third quarter. Also of note during the third quarter, we were very active in our share repurchase program, as we repurchased nearly 408,000 shares for just under $10 million. With our strong balance sheet and cash position, we are comfortable of repurchasing shares under our $25 million program, and we do not believe these repurchases will compromise our ability to grow. We continue to see strength in both our T&D and C&I markets and feel there are ample growth prospects in both of these markets over the long term. Investment in electric transmission infrastructure continues to be robust in many parts of the U.S. as well as in Canada. This outlook is also supported by recent capital spending announcements by a number of electric utilities as well as recent regulatory developments. Our position as a leading specialty contractor in our markets remains strong, which gives us confidence to invest further in our workforce, equipment and operation. We continue to strive to be the safest, most customer-focused contractor our T&D and C&I clients can hire to perform their work. We believe that focus and a competitive cost structure are keys to creating long-term value for shareholders. We are confident that MYR Group is well positioned for long-term growth. Now Paul will provide details on our third quarter 2014 financial results

Thank you, Bill, and good morning, everyone. Yesterday, we announced our 2014 third quarter and first 9 months results. Our revenues for the third quarter of 2014 were $248.5 million, which represented a $15.6 million increase, compared to the same period in 2013. On a percentage basis, 2014 third quarter revenues increased 6.7% over the 2013 third quarter revenues. The increase was primarily due to significantly higher revenues from C&I projects. On a consolidated basis, material and subcontractor costs comprised approximately 36% of total contract costs in the third quarter of 2014, compared to approximately 31% in the third quarter of 2013. Compared to the 2013 third quarter, T&D revenues decreased $7.2 million to $180 million, while C&I revenues increased $22.8 million to $68.5 million. Focusing on the T&D segment. Revenues were $135.3 million for transmission and $44.7 million for distribution in the third quarter of 2014. This compares to $161.9 million for transmission and $25.3 million for distribution for the third quarter of 2013. Material and subcontractor costs in our T&D segment comprised approximately 34% of total contract costs in the third quarter of 2014, compared to approximately 27% in the third quarter of 2013. Transmission revenues decreased in the third quarter of 2014 as compared to the third quarter of 2013, as declines from several large projects, which were completed or nearing completion, were partially offset by increased work on small and medium-sized transmission projects. In the third quarter of 2014, revenues from our transmission business were 75.2% of total T&D revenues, compared to 86.5% in the third quarter of 2013. In the third quarter of 2014, revenues from our distribution business were 24.8% of total T&D revenues, compared to 13.5% in the third quarter of 2013. C&I revenues increased by 49.8% to $68.5 million in the third quarter of 2014 from the third quarter of 2013. The significant increase in C&I revenue was primarily due to increased activity in several service offerings and improved conditions in our Colorado and Arizona markets. Material and subcontractor costs in our C&I segment comprised approximately 42% of total contract costs in the third quarter of 2014, compared to approximately 46% in the third quarter of 2013. Our overall gross profit in the third quarter of 2014 was $32.7 million, compared to $32.5 million in the third quarter of 2013. Our gross margin was 13.2% in the third quarter of 2014, compared to 13.9% in the same quarter of 2013. The decline in gross profit was predominantly due to lower equipment utilization as several large transmission projects were wrapped up or nearing completion as well as higher equipment repairs and maintenance costs. Third quarter 2014 and 2013 gross margins included net benefits of approximately 1% and 0.6%, respectively, from improved contract margins on several transmission projects, due to cost efficiencies, additional work and effective contract management. Third quarter 2014 SG&A expenses were $19.3 million, compared to $19.6 million in the third quarter of 2013. The decline in SG&A expenses was due to a $2.3 million legal reserve recorded in the third quarter of 2013, pertaining to litigation regarding a traffic accident. The impact of the legal reserve was largely offset by higher personnel costs to support operations and higher stock compensation costs. SG&A as a percentage of revenues was 7.8% for the third quarter of 2014, compared to 8.4% for the third quarter of 2013. Excluding the legal reserve, SG&A would have been 7.4% of revenues in the third quarter of 2013. Third quarter 2014 EBITDA was $21.9 million, compared to $20.4 million in the third quarter of 2013. Excluding the legal reserve, EBITDA would have been $22.7 million for the third quarter of 2013. Our provision for income taxes increased to $4.9 million in the third quarter of 2014, compared to $4.6 million in the same quarter of 2013. Our effective tax rate for the third quarter of 2014 was 36.8%, compared to 35.6% in the third quarter of 2013. Third quarter 2014 net income was $8.4 million or $0.39 per diluted share, compared to $8.3 million or $0.38 per diluted share in the third quarter of 2013. Without the legal reserve, third quarter 2013 net income would have been $9.8 million or $0.45 per diluted share. Shifting to the first 9 months of 2014. Revenues increased $44.9 million or 6.9% to $693 million, compared to $648.1 million for the first 9 months of 2013. The increase was primarily the result of significantly higher C&I revenues. Our overall gross profit in the first 9 months of 2014 was $90.3 million, compared to $91 million in the first 9 months of 2013. And our gross margin decreased to 13% versus 14% in the first 9 months of 2013. The year-over-year decline in both gross profit and gross margin in the first 9 months of 2014 was primarily due to lower equipment utilization, particularly on large transmission equipment along with higher equipment repairs and maintenance costs. EBITDAR decreased to $60.9 million or $2.83 per diluted share for the first 9 months of 2014, compared to $61.3 million or $2.86 per diluted share for the first 9 months of 2013. Without the legal reserve, first 9 months of 2013 EBITDA would have been $63.6 million or $2.97 per diluted share. First 9 months of 2014 net income was $22.4 million, compared to net income of $24.7 million in the first 9 months of 2013. Diluted earnings per share were $1.03 for the first 9 months of 2014, compared to $1.14 for the first 9 months of 2013. Without the legal reserve, first 9 months of 2013 net income would have been $26.2 million or $1.21 per diluted share. We invested $36 million in property, plant and equipment in the first 9 months of 2014, compared to $31.5 million in the first 9 months of 2013. We expect our capital spending in 2014 will be similar to our 2013 capital spending levels. We also, expect that our 2015 capital expenditures will be similar to our 2014 and 2013 capital spending levels. We are optimistic about putting most of our idle equipment to work and see the need to add more equipment to grow. Total backlog at September 30, 2014, was $409 million, consisting of $289.3 million in the T&D segment and $119.7 million in the C&I segment. Total backlog at September 30, 2014, increased by $11.1 million from $397.9 million reported at June 30, 2014. T&D backlog increased $23.6 million or 8.9%, while C&I backlog decreased $12.5 million or 9.4%. The increase in T&D backlog at September 30, 2014, was a result of a number of project awards of all sizes. Moving to the balance sheet. Stockholders' equity increased to $311.3 million at September 30, 2014, from $296.1 million at December 31, 2013. Our return on equity for the 12 months ended September 30, 2014, was 11.4% as compared to 14.2% for the prior year period. At September 30, 2014, we had approximately $64.6 million in cash and cash equivalents, no outstanding funded debt and $155.4 million in availability under our credit facility. In the first 9 months of 2014, we spent $9.8 million to purchase 438,577 shares of our common stock under our $25 million stock repurchase program. In conclusion, we had another solid quarter continuing our year-long trend of revenue growth and increasing backlog. With our strong balance sheet, we believe we are well capitalized for sustained organic growth and as well as possible acquisitions. I'll now turn the call over to Rick, who will provide an overall industry outlook and our view of MYR's opportunities.

Thanks, Paul, and good morning, everyone. In the third quarter, we remained active in business development, bidding work, building backlog and successfully executing projects of all sizes. As we enter the fourth quarter of 2014 and look ahead into 2015, we anticipate a healthy bidding environment for our T&D and C&I segments. We expect opportunities for transmission projects of every size and type as a result of reliability mandates, recent regulatory developments and the continued growth of renewable energy resources. We also expect to see increased capital investment by key clients in our C&I target markets on the heels of our country's strengthening economy. We remain proactive with our business development activities in our current markets as well as across new markets, particularly in Canada, Alaska and California. And we believe that these markets will offer us long-term growth opportunities. We are actively bidding projects in Canada's robust market and are hopeful of being able to win a Canadian project by the end of the fourth quarter. On the regulatory front, we believe that the D.C. Court of Appeals decision to uphold FERC Order 1000 bodes well for the future of the industry and should help advance transmission project opportunities to strengthen our nation's electrical transmission grid. The more competitive landscape should allow both traditional utilities and merchant transmission developers to pursue needed transmission projects within regional planning authorities and between regions. AEP recently announced that, in their estimation, FERC Order 1000 could create up to $42 billion in new market opportunities for nonincumbent transmission developers. Also, according to a recent report from Moody's, the implementation of FERC 1000 has led some utilities to team or form joint ventures with others outside of their traditional service territories in order to pursue competitive transmission projects. We believe that MYR Group may ultimately benefit from these activities in the future, based on our long-standing relationship with both utilities and independent transmission developers. Meanwhile, recent announcements of robust capital expenditure plans on behalf of the electrical utilities, including many of our clients, continue to provide us with optimism for T&D spending going forward. For example, Xcel Energy, a long-time client of MYR, expects to spend $4.5 billion over the next 5 years on their transmission infrastructure throughout all of their service areas. ITC projects $1 billion in excess funding capacity through 2018, which should provide it with adequate cash flows to fund transmission development. ITC recently announced that they are targeting $4.5 billion in transmission investments through 2018. MYR is in the process of completing ITC's V-Plan and we believe we are strategically positioned for future opportunities with ITC. We are also strategically positioned for transmission projects in the northeastern part of the U.S., where National Grid recently announced it would spend nearly $8.6 billion between 2015 and 2029 in New York on transmission and distribution upgrades, with $3.2 billion on transmission alone. Duke Energy announced that they plan to invest $1.9 billion on their system over the next 7 years, which includes $752 million in transmission improvements. And the U.S. Department of Agriculture announced that they would be investing $518 million in infrastructure projects for many of the nation's rural electrical co-ops. Aside from these investment announcements, we continue to monitor progress of single large transmission projects under development throughout the country. Some of these projects are being developed to help alleviate regional congestion, deliver low-cost energy and to deliver renewable energy to population centers. Amongst these projects is Clean Line Energy Partners, Plains & Eastern project, which was recently granted FERC approval to charge negotiated rates on their transmission line, and a new 725-mile 500 kV transmission line that Pennsylvania Power & Light proposed to PJM that would run from western Pennsylvania into New York and New Jersey. All of this activity helps to support our belief that we are in the midst of an historical period of transmission investment in the industry that should continue in the foreseeable future. We continue to market ourselves for transmission work across the country. Looking at our distribution business, we see opportunities with many of our clients throughout the country. There continues to be a focus on system reliability and the need to replace aging infrastructure on our nation's distribution system. This focus is evidenced by some of the recent spending announcements such as Duke Indiana's announcement of $868 million allocated in distribution system upgrades as part of their planned $1.9 billion budget over the next 7 years. Also, National Grid's 15-year T&D investment plan includes spending between $250 million and $350 million each year on their distribution system. These investments along with high-speed fiber upgrades, the continuing trend by utilities to outsource distribution work and a generally improving economy will continue to provide opportunities for MYR. Shifting to our C&I business. In the third quarter, we experienced continued revenue growth supported by increased bidding and project activities in our Colorado and Arizona markets. Our primary markets in health care, data centers, airports and industrial continue to produce solid financial results as many of our long-term clients continue their expansion of new services, offerings and locations. Select markets with limited competition, such as airfield lighting, light rail and data centers will remain a key area of focus for us in the remainder of the 2014 and into 2015. In addition to our primary markets, small to mid-sized opportunities are increasing in building automation, client-owned distribution upgrades, technology advancements and building renovations. These are desirable projects that require a moderate commitment of resources, which is important as shortages in skilled labor becomes more of a reality across various parts of the country. MYR Group's reputation as a safe, quality, long-term employer, continues to allow us to attract and retain new talent to blend in with our long-term employees, supporting new opportunities in our existing markets and surrounding states. Outside of Arizona and Colorado locations, we now have teams executing projects in Utah, Nevada and Nebraska. We are also reviewing and evaluating project opportunities in several other Western states. In all areas of our business, we remain confident, we will win our fair share of project opportunities as we continuously broaden our skills and competencies throughout our operations and as we sharpen our capabilities for successful and safe execution on all of our projects. We see positive market conditions and firmly believe we will continue to deliver solid value to our customers and shareholders. Thanks to everyone, for your time today. I'll now turn the call back to Bill, who will provide us with some closing comments.

Thank you for that update, Rick. I believe our results reflect the hard work we've done over the last several years to position our business for sustainable growth and success. We intend to invest in and strengthen our manpower and equipment resources, expand our geographic footprint, drive better execution and leverage our national scale and service offerings. We remain steadfast in our belief that every market we serve offers long-term growth opportunities, and we are confident in our ability to remain a market-leader in this business. We believe that our reputation will continue to provide us with growing opportunities across all of our markets. On behalf of Paul, Rick and myself, I would like to thank you for joining us on the call today and placing your confidence in MYR Group. I look forward to updating you on our progress next quarter. Operator, we are now ready to open the call up for comments and questions.

[Operator Instructions] And our first question comes from Noelle Dilts. Noelle C. Dilts - Stifel, Nicolaus & Company, Incorporated, Research Division: My first question, I just wanted to kind of better understand, given that you talked a little bit about underutilization issues the past couple of quarters. Can you just help us understand, in terms of the investments you're making in equipment, what you're investing in there? Is it new capacity? And what gives you the confidence that you'll be able to effectively utilize that equipment as you move into next year?

Well, first, we often see a drop in our utilization during the summer months as -- on the transmission side -- because our utility customers can't give us the outages to perform work during the summer, so we have some equipment sitting. A lot of that equipment -- most of that equipment has been put back to work as we get into the fall when our customers give outages back to us, to perform. In terms of spending money on equipment, going forward, certainly, a portion of that is to replace things that need to be taken out of service. We try to achieve an average age on our equipment. It depends whether it's a pickup truck or a distribution bucket truck or a big polar [ph] for transmission, whatever, those ages vary considerably. But we want to give our employees the best equipment possible to perform their work. So a portion of it is equipment -- or a portion of our capital is to replace equipment. But there's also a pretty significant growth component in there, so it would be a combination of both, Noelle. Noelle C. Dilts - Stifel, Nicolaus & Company, Incorporated, Research Division: Okay. And second, I thought it was really interesting that you used your cash position to buy back some shares in the quarter, with the remaining $14-or-so million on the authorization. How does that rank at this point in terms of your capital allocation priorities?

Well, we constantly look at all of the possibilities, ranging from buying stock back, to dividends, to investing capital in equipment, to investing capital in working capital to grow into new markets and provide new service offerings as well as acquisitions. We are probably one of, maybe if not the most, conservative capital structure today, and we think we can do both; return some capital to investors through the share repurchase program, but still fund the kind of capital needs that we see for both organic growth and acquisitions.

And our next question comes from Tahira Afzal.

This is Shawn [ph] on for Tahira today. First thing I want to ask is just about the C&I segment. We saw some nice growth this quarter, and I'm just curious to the extent you can comment on the organic growth trajectory and, sort of, the capacity in this business and when it, sort of, might peak?

I'm going to let Rick handle that. He is more familiar with our C&I business than myself. It's a good market. We've certainly had a nice run here recently, but Rick, do you have any color to add to that?

In the markets we're in right now, I don't see it peaking this year or going into next year, by any means. I see people continuing to spend money. A lot of our clients continue to want us to follow them into other areas. We've expanded geographically, as I said, into Nebraska, Nevada. We're looking at other areas to also expand into, but we'll do that a step-by-step process and make sure we've got the right people in place to perform that work safety and to the customer's expectations.

Okay. And then my next question is just on the material and subcontractor costs, they sort of ticked up a little bit this quarter on the transmission side. And how you're thinking about that mix over the next 12 months versus the previous 12 months?

Paul, do you want to...

I'll go ahead. I would -- I mean we don't control the subcontractor and material costs, so what I would suggest you do is, sort of, just take a long-term average, if that's what you're trying to use in your model. I don't see anything out there that will make it peak like it did in '11, so I would just, sort of, take a long-term average.

And our next question comes from Andy Wittmann. Andrew J. Wittmann - Robert W. Baird & Co. Incorporated, Research Division: I wanted to build on that first question a little bit. Paul, maybe -- can you talk about what percentage of the CapEx you would consider growth CapEx for this next year, just so we have an order of magnitude there?

I think for you Andy, the easiest thing to do is to look at our depreciation as a proxy for maintenance CapEx, and anything above that would be growth CapEx. Andrew J. Wittmann - Robert W. Baird & Co. Incorporated, Research Division: Okay. And then just on SG&A. I guess, if you look at the year-over-year comparison here, you add back the -- or you adjust for the legal charge last year. SG&A was up about 50 bps as a percentage of revenue, that's despite revenue being a little bit higher this year. I guess, maybe Bill or Paul, is there an opportunity in SG&A, was there maybe something onetime in the quarter? Or how should we think about the run rate of that line item on a go-forward basis?

Well, I guess, one piece of information that is partially responsible for it: As we've ramped down some big jobs, we've had project managers' job cost, accounting people that were job charged, previously. And when those jobs ramped down, they've now become part of our marketing team to go find the next job. And as we find that next job, they will again be job charged. So that always occurs, but when we had several jobs ramping down, we'd probably have had more of that kind of cost hitting SG&A and it's -- obviously, we don't want to lose our key staff people on the management, and the estimating and the job cost tracking side, so that's a factor. We haven't added any significant staff. Fewer corporate overhead folks has probably declined a little bit. So a lot of what you're seeing would be these operating or administrative folks that were previously job charged. Andrew J. Wittmann - Robert W. Baird & Co. Incorporated, Research Division: Got you. I guess, that maybe dovetails into maybe a broader question on margins. I think it appears that the transition from larger project work to small and mid-project work is having an impact on your overall margins. I guess, maybe, first, would you acknowledge that's the case, if that is the case. Your thoughts on that would be helpful. And maybe, secondly, as you look at what you're bidding today, can you talk about the inherent margin that you're seeing in the marketplace and what that could do for the direction of your margins from here?

The margins remain very competitive. Certainly, on the bigger jobs, there are fewer contractors that can handle those, so we might be bidding against 2 or 3 other players, whereas if we're bidding on a smaller or let's say $5 million job, you got a lot of regional mom-and-pop kind of players. So the bigger the projects probably allow for higher margins, but that said, we still do very well on most of our small to mid-sized jobs. We -- it's important that we execute those jobs flawlessly and that's certainly what we're trying to do. So looking forward, we don't comment on whether we see bid margins going up or going down; continues to be a very regional kind of thing. There are some parts of the country, we think, will support a little higher margin than other parts of the country. Some types of services support a little higher margin than others, and we're trying to pursue those things that have the highest margins. But I don't think there's any generalization that margins are changing significantly. There is always a considerable variability from year-to-year on bid margins. Andrew J. Wittmann - Robert W. Baird & Co. Incorporated, Research Division: Okay. Just any comments on the amount of large projects that are out there though, specifically on that one. Is that coming up again in terms of what you're looking at or bidding on and preparing to bid for? Or is that still -- is the trend line still mostly away from the larger projects?

There is definitely not a CREZ to package large projects in the market. There are a number of big ones that we expect to be bidding in 2015. But as I've mentioned on the call, over the years that CREZ work was kind of a bubble of work. If you pull that out, I think the large project opportunities are comparable to what they have been historically. And Texas continues to have lots and lots of work, but we didn't -- there is not another 2,400 miles of 345 kV trying to get done in a period of 2.5 years.

And our next question comes from Dan Mannes.

And I apologize in advance, I might have missed some of the earlier questions, so if you're repeating, my apologies here. But as it relates to the SG&A side, when looking at your T&D business, I'm still struggling a little bit to understand if maybe that's weighing on margins a little bit on the bottom line. And is that more than just kind of the shift of project managers, especially as you do some of this regional expansion and open up new offices, which I believe you've done in, I want to say, Texas and Oklahoma. Is that weighing, at all, on the margin side as you're ramping up work or not really?

Certainly, as we try to expand and get into new markets and hire people to -- that would be a factor. We -- it's not so significant that we'd call it out and say we had x number of -- hundreds or thousands or millions on positioning us for the future, but that would be a factor.

And I mean, you mentioned going after kind of the markets with the best margins. On the T&D side, I guess, my perception has been that those 2 markets, I guess, Texas and Oklahoma, wouldn't necessarily be the regions with the best margins. Can you maybe walk us through, a little bit, your thoughts on those expansions?

Well, Texas, you are right. There is a lot of resources coming off of those CREZ jobs that are looking to find homes, which put pressure on margins. But we're not in it for a quarter at a time. We view Texas as a fantastic place to be for the long term. And we may take some work in Texas, at a little lower margins than what we like, but I think over the long term, that's a great market and the margins will be strong in Texas.

And Oklahoma?

Same thing with Oklahoma.

Okay. And then I think you may have mentioned this, but I wanted to make sure I understood. You guys obviously will continue to pursue work in Canada. Any thoughts on the potential there? And if you can kind of scope out how -- what size projects you're going after at the outset, given that you're kind of moving -- going from a standing start?

Well, we're trying to grow smartly. Probably taking on a gigantic project from the start would not be in our plans. We think projects -- a $50 million project would be attractive to us, or a $20 million project. And we want to quickly get ourselves in a position to do the much larger ones. But right now, the kinds of things we're looking at are more modest in size.

Okay. And then the last thing, and again, you may have already addressed this, but as it relates to utilization, I know, obviously, it's been kind of challenged a little bit on the transmission side the last 3 quarters. Some of that's seasonal, some of that's been nature of projects, but your CapEx budget continues to point to growth in overall equipment. Can you square that for me? I mean, I don't mean to overreact to the kind of short-term underutilization, but it's been a couple quarters now, and yet it doesn't sound like you're backing off your CapEx plans.

No, we're not. We're -- we still find lots of opportunities to invest in the business, and we're rational as we're doing it. Believe me, I don't want to buy iron for the sake of parking it on a parking lot. So we still see needs to add certain equipment in certain areas. Our mix of work has changed a little bit. So some -- the pulling and tension equipment and string and blocks that you might use for a 500-line might not -- or would not be the same that we'd use on a 138-line. So I wish we had the ability to swap those out and have perfect equipment just in time. But -- and some of the equipment we're adding would be for these smaller, lower-voltage transmission jobs.

And our next question will come from William Bremer from Maxim Group.

Was there any material substation work completed this quarter? I'm just curious. And looking at your overall geographic regions, any particular region stood out this quarter, or do you see in the next few, shorter-term projects coming to fruition?

We're working on, I'd judge, 20 to 40 substation jobs at any one point in time. Every month, one of them completes or several of them complete, and we keep adding to it. They're not necessarily gigantic substation jobs, but we've got a lot of substation work across the country. And we haven't commented that we like this one area of the country better than the other. Clearly, we're not as strong in all the markets as we'd like on the substation, but we're pursuing all of them. And I think substation work is a great opportunity for MYR to expand its service offerings into new regions.

Okay. And Bill, you voiced that what you're seeing right now is a pretty healthy bidding environment. Could you sort of give us an idea, is it starting to shift, in your opinion, back to some of the larger projects? Or do you still feel as though it's more, in essence, just smaller blocking and tackling projects and then coupled with some of the larger ones here and there?

I think it's going to be a good mix of big jobs as well as the smaller jobs. I'm not really forecasting any significant changes in the makeup of that bidding environment.

Okay. And then one on the C&I. Are these type of margins that have continued -- they've pretty much been ramping up here in the last -- especially sequentially -- should we be thinking about possibly tweaking these margins a little higher, going forward, in the C&I division?

Rick, do you want to answer that?

I think we've gone after, and had some luck, I guess, and skill of managing our projects as we've executed them. When I look at the overall margins, where they're going forward, I still see a pressure from competitors out there. We've still got to be able to play in a realm of what's reality, so I wouldn't necessarily increase that model, going forward. I will use something similar to where we've been.

[Operator Instructions] And our next question comes from Min Cho. Min Cho - FBR Capital Markets & Co., Research Division: Regarding your C&I backlog, so it's obviously down year-over-year and sequentially, but you commented that the bidding remains very strong. Is your win rate dropping a little bit or do you think it is more of a timing issue right now?

It's definitely more of a timing issue. We still see a lot of opportunities, a lot of discussions with customers about upcoming projects, areas they're going to be built in, and having those on a daily basis. So it's a timing issue at this point. Min Cho - FBR Capital Markets & Co., Research Division: Okay. And then if you could talk a little bit about your acquisition pipeline? You've obviously discussed moving into new markets and offering new services across both of your segments. Are you planning on doing most of this organically or will you need acquisitions to make a more substantial impact?

We're certainly -- our primary focus is on organically growing our business, but we have become a little more proactive looking at acquisition opportunities across the country and into some new service offerings, but we're still primarily focused on organic growth. Min Cho - FBR Capital Markets & Co., Research Division: Okay. Last question, you definitely talked about high-speed fibers being an opportunity on the distribution side. Are you doing any work there right now? And if you could just describe what you are seeing in terms of the longer-term opportunity there?

On the distribution side primarily, where we see it is to make ready work of doing the utility work to allow the fiber contractors to come in. We do a very limited amount of that work, so the majority of ours comes on the distribution side. Min Cho - FBR Capital Markets & Co., Research Division: And you are doing -- and you are actually generating revenue there right now?

We do some in our normal distribution market for our alliance customers.

And we have a follow-up question from Noelle Dilts. Noelle C. Dilts - Stifel, Nicolaus & Company, Incorporated, Research Division: So the first is really just when you're looking at the transition awards that you picked up in the quarter, can you just talk about what the biggest award was that you picked up and kind of the average size of the jobs that you're generally winning right now?

Noelle, we didn't call out specifically, like we did last quarter on the certain size. I mean we picked awards of all sizes. Obviously, there wasn't an award of $50 million or $100 million in there, if there was at that level we would have probably put something out in advance of the call. Noelle C. Dilts - Stifel, Nicolaus & Company, Incorporated, Research Division: Okay. And then my second question. I understand you might not be too willing to talk about this, but just given that we're Pike go private, I'm just curious if you're still seeing -- if you're seeing a lot of private equity folks kind of buzzing around the space, and if you're being approached often? And then just how you're thinking about potential offers for the company?

Well, there is no shortage of investment bankers. But as far as Pike, you need to talk to them about how they looked at it, but constantly, you can imagine there are a lot of investment bankers out there.

And we have another question from Andy Wittmann.

Okay. It sounds like Andy may have dropped off. Andrew J. Wittmann - Robert W. Baird & Co. Incorporated, Research Division: Sorry, guys. I was blocked out there. I was just saying that my questions have been asked and answered so I don't have any other questions.

I'm not showing any further questions. I would now like to turn the call back over to Mr. Bill Koertner for any further remarks.

Well, I'd like to thank everyone for participating on the call. As always, we thank you for your support, and we thank our employees for their hard work to produce these results. I don't have any further -- anything further, and look forward to talking to you after we close out the year.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program. You may all disconnect. Everyone, have a great day.