Good morning, everyone, and welcome to the MYR Group First Quarter 2014 Earnings Results Conference call. Today's conference is being recorded. At this time, for opening remarks and introductions, I would like to turn the conference over to Mr. Philip Kranz of Dresner. Please go ahead, sir. .

Thank you, and good morning, everyone. I'd like to welcome you to the MYR Group conference call to discuss the company's first 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, May 14, 2014, at 11:59 p.m.

Eastern Time by dialing (855) 859-2056 or (404) 537-3406 and entering conference ID 24614544..

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 management as of this date, and MYR 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 on Form 10-K for the year ended December 31, 2013, the company's quarterly report on Form 10-Q for the first 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 first quarter 2014 conference call to discuss financial and operational results. I'll start by providing a brief summary of the first 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 overall industry outlook and discuss some of MYR Group's opportunities going forward. I will then conclude with some closing remarks and open up the call for your comments and questions..

We posted a strong first quarter 2014 with 7.1% higher revenues compared to the first quarter of 2013, as well as an 18.2% increase in backlog over the fourth quarter of 2013.

After substantially completing several large projects during 2013 and watching our backlog decline over the last several quarters, we are pleased to see an uptick in new project bookings during the first quarter.

We are also satisfied with our gross margin for the first quarter of 2014, considering our performance was achieved notwithstanding severe winter weather conditions throughout portions of the U.S. in the the first quarter..

Record cold and snow conditions, as well as high winds in parts of the country, caused difficult working conditions, leading to less revenue, lower productivity, lost work days and idle equipment on several of our jobs. Looking ahead, we remain optimistic about the long-term outlook for both our T&D and C&I business segments.

We are encouraged by the momentum we've experienced thus far in 2014. We believe that our strategy has effectively positioned MYR Group as one of a few companies with the capabilities and experience required in order to successfully win and execute our share of future opportunities..

Now Paul will provide details on our first quarter 2014 financial results. .

Thank you, Bill. Good morning, everyone. Yesterday, we announced our 2014 first quarter results. Our revenues for the first quarter of 2014 were $215.6 million, which represented a $14.3 million increase compared to the same period in 2013. On a percentage basis, 2014 first quarter revenues increased 7.1% over the 2013 first quarter.

The increase was primarily due to higher revenues from C&I projects of all sizes..

On a consolidated basis, material and subcontractor costs comprised approximately 26% of total contract costs in the first quarter of 2014 compared to approximately 30% in the first quarter of 2013.

From a segment standpoint, when compared to the 2013 first quarter, T&D revenues increased $1.5 million to $162 million, while C&I revenues increased $12.8 million to $53.6 million..

Focusing on the T&D segment. Revenues were $134.2 million for transmission and $27.8 million for distribution in the first quarter of 2014. This compares to $130.5 million for transmission and $30 million for distribution for the first quarter of 2013.

Material and subcontractor costs in our T&D segment comprised approximately 20% of total contract costs in the first quarter of 2014 compared to approximately 27% in the first quarter of 2013..

Transmission revenues increased in the first quarter of 2014 as compared to the first quarter of 2013, as increased work on mid-sized transmission projects more than offset lower revenues from several large projects, which were completed or nearing completion.

In the first quarter of 2014, revenues from our transmission business were 62.2% of total revenues compared to 64.8% in the first quarter of 2013. In the first quarter of 2014, revenues from our distribution business were 12.9% of total revenues compared to 14.9% in the first quarter of 2013..

C&I segment revenues increased by 31.3% to $53.6 million in the first quarter of 2014 from the first quarter of 2013. Material and subcontractor costs in our C&I segment comprised approximately 47% of total contract costs in the first quarter of 2014 compared to approximately 40% in the first quarter of 2013..

Our overall gross profit in the first quarter of 2014 decreased to $27.1 million from $27.3 million in the first quarter of 2013. Our gross margin was 12.6% in the first quarter of 2014 compared to 13.6% in the same quarter of 2013.

First quarter of 2013 included a gross margin benefit of approximately 1% related to improved contract margins on a few large transmission projects.

First quarter of 2014 benefited by approximately 3.1% in gross margin due to improved contract margins on a few large transmission projects due to cost efficiencies, additional work and effective contract management.

However, this benefit was partially offset by lower contract margins of approximately 1.4% on other projects due to severe winter weather conditions that caused lower productivity in certain areas of the country.

The remaining benefit was largely offset by lower equipment utilization and higher equipment repair and maintenance costs during the first quarter of 2014..

First quarter 2014 SG&A expenses were $16.9 million compared to $16 million in the first quarter of 2013. Increase in SG&A expenses was primarily related to higher personnel costs due to increased staff to support operations. SG&A as a percentage of revenues was 7.9% for the first quarter of 2014 compared to 8% for the first quarter of 2013..

First quarter 2014 EBITDA was $18.2 million compared to $18.4 million in the first quarter of 2013. Our provision for income taxes declined to $3.7 million in the first quarter of 2014 compared to $4.3 million in the same quarter of 2013. Our effective tax rate of 37.3% was 60 basis points below the 37.9% in the first quarter of 2013.

The decline in the effective tax rate was primarily caused by lower state taxes due to changes in the mix of businesses between states..

First quarter 2014 net income was $6.3 million or $0.29 per diluted share compared to $7 million or $0.32 per diluted share in the first quarter of 2013. We invested $12.4 million in property, plant and equipment in the first quarter of 2014 compared to $12.5 million in the first quarter of 2013.

We currently expect 2014 capital spending to be similar to 2013 capital spending..

Total backlog at March 31, 2014, was $385.6 million, consisting of $248.5 million in the T&D segment and $137.1 million in the C&I segment. Total backlog at March 31, 2014, increased $59.5 million from the $326.1 million reported at December 31, 2013. T&D backlog increased $59.2 million or 31.3%, while C&I backlog increased $300,000 or 0.2%.

Increase in backlog at March 31, 2014, was the result of a number of project awards of all sizes..

Moving to the balance sheet. Stockholders' equity increased to $302.5 million at March 31, 2014, from $296.1 million at December 31, 2013. Our return on equity for the 12 months ended March 31, 2014, was 12.9% as compared to 15.7% for the prior year period.

At March 31, 2014, we had approximately $54.4 million in cash and cash equivalents, no outstanding funded debt and $156.6 million in availability under our credit facility..

On May 1, 2014, MYR's Board of Directors approved an amended share repurchase program, increasing the amount of the program from $22.5 million to $25 million and extending the term of the program through August 31, 2015. We did not repurchase any shares under this program in the first quarter of 2014..

In conclusion, solid execution on our jobs led to another strong quarter with revenue growth despite difficult weather conditions in certain parts of the country, and successful bidding result -- resulted in increased backlog in the first quarter.

With our strong balance sheet, we believe we are well capitalized for sustained organic growth, as well as for possible acquisitions..

I'll now turn the call over to Rick Swartz, our Chief Operating Officer, who will provide an overall industry outlook and our view of MYR's opportunities. .

Thanks, Paul, and good morning, everyone. Our company is off to a good start in 2014 with increased backlog, revenue growth and steady bidding activity throughout the U.S. We continue to focus on expansion within our existing market, as well as business development activities in new geographic markets.

We remain confident that the overall market for large transmission projects will remain favorable over the long term, and we continue to see significant transmission spending on projects of all sizes as a priority for utilities across North America. Our optimism is reflected in our continued investment in additional fleet to support future business..

We were successful in the first quarter of this year in a number T&D bids, which drove a 31.3% increase in T&D backlog. Backlog growth came in small- to medium-sized projects in many areas of the company. No one single project award was over $50 million during the quarter..

These large spending initiatives are not driven by load growth, which is minimal, but rather by the reliability needs due to an aging infrastructure, mandates for regional transmission expansion plan, renewable generation interconnection need and transmission required for changing coal to gas generation..

We also anticipate ongoing opportunities for system upgrade as the need to strengthen our electric infrastructure in order to protect system integrity is at the forefront for many utilities.

For example, the damage incurred from major storms like Hurricane Sandy and more recently, the attack in 2013 on PG&E's Metcalf Substation have heightened concerns about the vulnerability of the nation's power grid..

In the first quarter of 2014, many utilities and regional grid operators announced their capital spending plans for the next several years. For example, PJM recently announced that its member utilities will be increasing their infrastructure investment by 102% over the next 5 years compared to the previous 5 years.

And a number of those utilities are key clients of MYR, including PPL, Dominion, AEP, and PSE&G. Additional investment is primarily driven by PJM Interconnection-mandated transmission upgrade to relieve projected system overloads, including mandates related to retiring coal generation.

In the Mid-Atlantic, for example, to date, there have been 20,000 megawatts of coal generation that has been taken offline with an additional 49,000 megawatts expected to come offline over the next 3 years, driving the need for new generation and transmission solution..

Other recent spending announcements include PSE&G's commitment of $12 billion in spending, which includes $1 billion of annual transmission upgrades for the next 3 years, Southern Cal Edison's $15 billion to $17 billion investment in both Transmission and Distribution over the next 4 years, ITC Holdings' new 5-year $4.5 billion capital spending plan, and AEP's transmission investment of $1.5 billion annually through 2016.

In addition, EEI recently indicated that they expect investments by members during 2014 and 2015 to be significantly higher than in years prior to the historic peak projected for 2013.

These announcements not only reinforce our positive market outlook but also represent significant opportunities for which MYR Group is ideally suited as a nationwide electrical contractor with a strong resume of experience and depth of resources..

In terms of new market expansion, we've remained diligent regarding business development activities across all markets, particularly in Alaska, California and Canada.

In Alaska and California, we continue to work towards growing our regional presence and pursuing opportunities with major utilities that operate in these states, and we believe these markets will offer us long-term opportunity..

Throughout Canada, we have continued confidence about future opportunity. The Conference Board of Canada recently estimated that over $15 billion in annual investments will be needed for Canada's electrical infrastructure system over the next 20 years.

Our confidence in the Canadian market was further supported with the May 1 announcement of Berkshire Hathaway Energy's agreement to acquire AltaLink and establish a long-term presence in Alberta's transmission infrastructure market.

Within Canada, we are actively engaged in business development and bidding activities with major utilities and recently established an office in Calgary..

In addition to continued opportunities in the electrical transmission market, we anticipate improvement in the electrical distribution market. The emphasis on system reliability, storm hardening -- storm hardening measures and a steady recovery in the housing market all point to stable and long-term growth for our distribution services.

In the Northeast, for example, we see storm hardening initiatives with a number of clients to better prepare for extreme weather events. These include repair, upgrade and maintenance of their distribution systems..

In the Western U.S., we also see a steady increase in distribution upgrades and maintenance to ensure system reliability. Our nation's housing market also continues to improve, which leads to increased distribution opportunities for new connection.

We expect that utilities will continue to augment their internal workforce with contractor crews, which should continue to provide opportunities for MYR..

Shifting to our C&I business. The increased momentum in bidding and project activity continued in the first quarter of 2014 in both our Colorado and Arizona markets. Meanwhile, we experienced growth in revenue, while our backlog remains stable as compared to the end of 2013..

In prior conference calls, we highlighted that multiple key markets in Colorado, including health care, data center, airport, and industrial, continued their growth and remain consistently strong areas for us.

As we move into 2014, we are seeing growth in additional markets, which is aerospace, manufacturing and transportation and continue to expand our internal resources to pursue various communications and electrical projects in support of these growing markets. .

Our long-term client relationships also led to increased opportunities in states surrounding Colorado and Arizona, particularly Utah, Wyoming, Nebraska, New Mexico and Texas, where our clients have other facilities.

In the first quarter, we were awarded a contract for a data center expansion in Utah and a corporate headquarters for a growing national retailer in Nebraska. We are proud of our contract awards in these states and continue to seek opportunities to expand our C&I capabilities in these and other regional markets..

We believe we are an industry leader in large, complex projects, which should position us to win many of these future opportunities despite continued strong competition.

We are one of the few electrical contractors in Colorado, Arizona and the surrounding region with the scale, expertise, experience, resource, skill [ph] and a safety record necessary to successfully execute these larger and more complex projects..

In summary, we began 2014 by delivering solid first quarter results.

As we continue to grow, develop and refine our expertise through all of our operating groups, we are not only confident in our abilities to capture an array of project opportunities, but we are also confident in our capabilities to successfully source and safely execute our projects in order to experience continued success for our company, stockholders, employees and clients..

Thanks to everyone for your time today. I'll now turn it back over to Bill Koertner for some closing comments. .

Thank you for that update, Rick. We are pleased with our financial and operational performance in the first quarter and remain optimistic about numerous growth prospects in the markets we serve.

As we pursue strategies to grow our business on all fronts, both organically and through potential acquisitions, we intend to remain disciplined in bidding work, executing projects and evaluating acquisitions. This disciplined approach is a cultural trait of MYR Group and has served us well in the past.

We believe staying focused on the basics of the business will serve the company well going forward..

We continue to invest in our people and our fleet, and strive for continuous improvement in all areas of the organization. We believe that the key to creating the greatest value for our customers and maximizing shareholder value rely on that..

On behalf of Paul, Rick and myself, I'd like to thank you for joining us on the call today and for your continued confidence in our ability to successfully and responsibly grow our company. We look forward to updating you on our progress next quarter..

Operator, we are now ready to open it up for comments and questions. .

[Operator Instructions] And the first question is from Alex Rygiel of FBR. .

Bill or Rick, could you expand a little bit upon some of the new transmission awards in the current quarter? Are those new projects? Are they extensions of existing projects? And depending on your answer there, could you sort of comment on the pricing or margin effect of those smaller projects sort of replacing larger projects over the next 12 months?.

Let me start off, Alex. As you'd expect, they're a mix of all of the above. Some new projects definitely, as well as some add-ons to some existing projects. So it's a mix of all of those. We do not comment on margin; that would be implicit in our backlog.

We try to evaluate each opportunity on its own merit based upon the risk of the job and how well it fits us. There are times we get very aggressive on pricing work if we need it for a particular area to keep resources busy. There are other areas where we're maybe more full on our capacity, and we're not as aggressive in pricing those.

But we try to do what makes sense for the company. And I don't know, Rick, if you have anything you want to add. .

No, I really don't have anything to add to that, Bill. .

That's helpful. And then Bill or Rick, the electric distribution business has been declining for a while now, but I suspect if you normalize this quarter for seasonality or bad weather, the distribution business actually might have been flattish to maybe even up year-over-year.

Are we at that inflection point where distribution starts to grow again?.

We are very hopeful that it will. We are seeing positive signs in different areas of the country on the distribution spend on the part of companies. As always is the case, every period, we're winning work and we're losing some work.

And we do think the distribution business is important for our company and aggressively go after it, so in the aggregate, I think, we believe it's going to trend up the long-term. Whether that'll be reflected in the next quarter or -- you can't say for sure, but we are very optimistic about distribution spending starting to tick up. .

And the next question is from Tahira Afzal of KeyBanc Capital Markets. .

First question is, are we now at a point where -- we've seen a lot of project activity.

Are we back at a point where we can be looking at sort of having these $200-million-plus quarters in bookings on the T&D side in 2014?.

Well, Tahira, we did have a nice uptick in our project bookings in the quarter. We certainly are not at our capacity. We need more work. We're aggressively pursuing more work. There are many opportunities out there, and we feel we've got significant capacity to take on more work.

But we want to remain smart in how we bid these things and not get crazy with ridiculous pricing or accept terms and conditions that will haunt us down the road. So we have the resources to pursue additional work, and we're dedicated to going after it smartly. .

All right.

So would it be fair to say, assuming you have this opportunity, you could see sort of a $200 million clip per quarter going forward?.

Certainly, that's possible. I'm not suggesting -- that's not predicting anything, but those kind of opportunities, that would be a possibility. .

Got it. Okay. And Paul, great job on breaking down all the different moving parts on the T&D side in terms of margins in the first quarter. I assume the productivity and the sort of 100 basis points plus you've lost from productivity issues and weather we start to hopefully see come back immediately in the second quarter.

And I guess, on the utilization aspect, that portion of the basis points that versus last year, would we assume that slowly starts to fill up? Or would it be a pretty rapid fill-up given if these small- to mid-sized projects coming to you may expand, if you could see those ramp fairly rapidly?.

No, look, I mean, we're always trying to optimize our fleet utilization. Obviously, what I said in the comments is, we brought a lot of equipment in for maintenance, and that brought down utilization. We had higher costs. So as soon as we can redeploy that to other jobs, we'll get it out there and get it working. .

And the next question is from John Rogers of Davidson. .

A couple of things.

First of all, just in terms of the weather in the first quarter, was it more of a revenue issue or a cost issue for you?.

It's all of the above. Obviously, it costs to complete accounting, your revenues are driven based upon your cost. So we weren't able to work, and the men weren't getting paid. We weren't recognizing costs, so that doesn't bode well for driving revenue. That's one piece of it.

And the other part, there are certain costs that go on even if you're not physically accomplishing much, and that causes your profit margin or contract margin to come under pressure. So it really both drives revenue, and the productivity makes the margin more difficult to maintain, so really affects you 2 ways. .

Sure.

I guess, I'm curious as to how much work that was deferred out of the first quarter and would potentially be completed in the second or subsequent quarters?.

We haven't quantified it, but it'd be in the millions. .

And then in terms of the opportunities, especially up in Canada, you referred to, is there a significant entry cost going up there, I mean, in terms of having to price projects maybe lower to get into that market or taking on greater portion of subcontractors as you get established? I'm just trying to think about potential margin impact from work up there, especially in the early stages.

.

As we -- in the early stages, as we're looking to set up our office and as we said, we opened an office up there. We continue to price that work as what we see that work costing. We've got some local people from that area, so we're not doing it from the United States. So as we hire those people, we bring that expertise on with us.

So it's not something that we see it as a high-cost entry for us to go into that market. .

And in terms of the opportunity up there, I mean, is it -- can you quantify that at all? I mean, is it the hope that, that could be 25% of your business? 50% of business? 5%, any direction there?.

I think, in the prepared remarks, we talked about the study prepared by the Conference Board in Canada. There's billions of dollars of potential work up there. As far as what it could mean for MYR, no, we haven't quantified that, but it could be significant.

If we land a $100 million or a $200 million job or a series of smaller jobs, it could potentially be a game changer for the company. .

Okay. And then lastly, if I could, the -- in terms of the pass-through in subcontractor work in the quarter, it was lower, which I would have thought would have raised margins, but I understand the weather impact.

Is there a significant variance in the mix of work that you're now booking? I mean, are we back to what we saw a couple of years ago when there was a high portion of subcontractor and pass-through work or more in line with recent trends?.

No, John, we think it's probably more in line with recent trends. What I've said before is if we do book a large award and we let folks know about it, we will say what we think the approximate pass-through percentage is. So I would say for your models, just keep it within line with recent trends. .

Okay.

So Paul, that would suggest that most of the work that you've been booking has been relatively smaller projects?.

Well, as Rick said, yes, of all the awards we've had, no one award was greater than $50 million. .

The next question is from Adam Thalhimer of BB&T Capital Markets. .

The -- what is the bidding environment like for $50 million plus awards?.

Adam, it depends on the area and the part of the country. As Bill said, we're seeing pressures in some areas where the margins are being, I guess, taken very aggressive or people are looking at those as areas that they need to be in for some reason. And we're seeing other ones where we have higher margins.

So we really see a variance across the country. .

Yes. Adam, I'd like to maybe add to that. I think everybody on this call is aware of all the work that was completed in 2012 and 2013 in Texas. Now that created a number of new competitors that got into that market.

There's going to be a lot of work in Texas ongoing, but right now it is very competitive because of not only the existing players that have been in the market for decades but also some of the new entrants. So that'd be an example of a market that I see as being very aggressive on the pricing side. .

How far are those contractors willing to travel to pick up work?.

You'd have to talk to them. I think sometimes we think they travel too far. .

Okay. Okay, that's fine.

And then on Alaska, can you give us any update as to how that expansion is going?.

We continue to evaluate projects. We have a continued bid stream up there right now. It's come off the winter side, so we're kind of in the middle of the bid season up there -- or the beginning of the bid season, I should say. We continue to assess each project that comes out and price those.

It appears to be a good market for us to be in, but as far as big megaprojects, I don't see any large ones on the horizon right now. .

And then lastly, I just wanted to try to get a -- I'm still trying to get my arms around how T&D margins are going to trend going forward.

And maybe one way to ask it is, the 310 basis points you called out for better project execution, does that come -- so if I look at Q1, maybe you add back 140 basis points from weather to get a sense of what a normal margin is, but is the 310 coming out in the future quarters?.

Well, let me try that, Adam. The 310, what we said, it was through better project execution, additional work and just overall better job on it. So I think what you're trying to allude to is, this is just purely project closeout, but it was more than just project closeout. So I don't know if you can totally take that out every quarter.

Every quarter, we have some events like that, where we pick up additional work on jobs. .

Okay.

And lastly for me, what was the storm revenue year-over-year?.

It was essentially flat. And neither first quarter this year or first quarter last year were anything unusual, but it was flat, within a few hundred thousand dollars of first quarter last year. .

The next question is from Dan Mannes of Avondale. .

First, a quick question and I know you guys don't like answering questions on specific projects, but I'll ask one anyways. I think in April, BPA announced that you guys are going to be the contractor on a decent-sized project. I think it's the Monumental project.

Is that something that was already in backlog at 331? Or did that happen subsequent to the quarter?.

That's -- that one, Dan, is in our backlog. .

And secondly, I think you had a question earlier about existing sort of alliances.

Can you talk maybe about how CapX2020 is playing out and what your share has been relative to maybe it was at the outset?.

Right now we're currently finishing the last project that we're -- that are currently underway for us up there right now. There is 1 more segment coming out to bid in the next 6 months within that time period, but that'll be the last segment as far as the CapEx side goes up there, and that will come out to bid, like I said, in the next 6 months. .

So it's kind of winding down at this point?.

Yes. .

Got it. Two kind of more development questions. In California, you are going after the market. You've been talking about it for a while. You highlighted SoCal Ed's [Southern California Edison's] spending, which is obviously pretty robust. Maybe more on distribution.

Can you talk about your win rate there? Have you seen any progress? Or are you still kind of in the early stages of that expansion?.

We're in the early stages. We continue to talk to all the utilities out there. We've got some pretty in-depth conversations going on. I wouldn't -- I would probably put it as, it's a timing issue of when we go in, not if we go in. .

I'm sorry, when you say -- you say, you're not currently bidding in California?.

No, we are bidding, but when we actually start the construction work, if we are successful. .

Got it. And then lastly, kind of a similar question on Canada, you are bidding there.

Number one, have you won anything? And number two, have -- are you still considering or would you still consider partnering with someone local?.

I don't think... .

Well, let me -- we have bid some work. We are having discussions with clients up there and are very hopeful that it's going to result in contracts. We are very open to partnering up with other entities if it makes sense. In some cases, it won't make sense. We'd be better off going by ourselves.

But we wouldn't foreclose the opportunity in bidding on some of these larger jobs with other parties. .

[Operator Instructions] The next question is from William Bremer of Maxim Group. .

Most of my questions have been asked already, so let's go to the CapEx.

Can you give us a little more granularity on what you're purchasing there and where that's going to be placed?.

Well, I mean, Jason -- Bill, we continue to purchase Transmission and Distribution equipment. As far as where, it's a function of where the jobs are. I really can't give any more color on where we're going to put new equipment. .

Bill, as we've mentioned on prior calls, we are much more centralized in our fleet operation than at least some of our competitors. So we think that it's an advantage to have a centralized fleet and ultimately, we feel it would result in greater utilization.

So as we buy equipment, it's not like we're buying equipment for California or Texas or wherever it might be. So the kinds of things we're buying, Paul's right. Most of it still is in the transmission area. We are buying -- continuing to buy also a lot of tooling that we think is needed for the work that we have.

So -- but it's not for a specific job that we'd run out and buy something. .

Right, right. No, the overall expansion of the company is there. I just wanted to get a sense of maybe where you're placing some of these -- the better cranes and tensioners for upcoming projects. One for Rich.

Can you give us a sense of how labor and labor rates are at this time? And how -- and can you possibly compare that to the last 6 months?.

From a labor rate standpoint, I would say they've probably stabilized a little bit from where they were when the transmission market, maybe that 2011 period. You see parts of the country where they're coming down, as Bill said, in Texas, areas with very high competition like that.

Then we see other geographic areas, because of the amount of work that are compressed into those areas, some of them are -- it's taking us more to get people into those areas, and we're putting that in our estimates and carrying that forward because of our experience and our history with cost of those areas.

So again, it's a mix of both pressure downward in certain areas like Texas, and then the Northeast, you see that increase there. .

And then, Paul, just a simple question for the model in terms of a tax rate going forward.

Do you anticipate that we stay in the 7% -- 37% range? Or could we tweak that a little bit either way?.

For your model, I'd stay in the 37% range. .

And there are no further questions in the queue at this time. I'll turn the call back over to management for closing remarks. .

Well, I want to thank everyone, for participating on the call. We're very excited about the opportunities in the energy delivery markets we serve. And I want to thank our management team and our employees for all their hard work and also to thank stockholders for their continued support. I don't have anything further.

I look forward to visiting with you next quarter on our next call. Thank you. .

Thank you. Ladies and gentlemen, this concludes today's conference. You may now disconnect. Good day..