Kristine Walczak - Senior Vice President, Dresner Corporate Services Rick Swartz - President and Chief Executive Officer Betty Johnson - Senior Vice President, Chief Financial Officer and Treasurer Tod Cooper - Senior Vice President and Chief Operating Officer of T&D Jeff Waneka - Senior Vice President and Chief Operating Officer of C&I.

Tahira Afzal - KeyBanc Capital Markets, Inc. Andrew Wittmann - Robert W. Baird & Co. Bobby Burleson - Canaccord Genuity Inc. Noelle Dilts - Stifel, Nicolaus & Company, Inc. Jonathan Paul Braatz - Kansas City Capital Associates Andy Wittman - Robert W. Baird & Co..

Good day, ladies and gentlemen, and welcome to the MYR Group Incorporated First Quarter 2017 Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be given at that time. [Operator Instructions] As a reminder, this conference call may be recorded.

I would now like to turn the conference over to Kristine Walczak of Dresner. You may begin..

Thank you, and good morning, everyone. I would like to welcome you to the MYR Group conference call to discuss the company's first quarter results for 2017, which were reported yesterday.

Joining us on today's call are Rick Swartz, President and Chief Executive Officer; Betty Johnson, Senior Vice President, Chief Financial Officer and Treasurer; Tod Cooper, Senior Vice President and Chief Operating Officer of MYR Groups' Transmission and Distribution or T&D Segment; and Jeff Waneka, Senior Vice President and Chief Operating Officer of MYR Groups' Commercial and Industrial or C&I Segment.

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 go to MYR's website, where a copy is available under the Investor Relations tab.

Also, a replay of today's call will be available until Wednesday, May 10, 2017, 11:59 PM Eastern Time by dialing 855-859-2056 or 404-537-3406 and entering Conference ID 5308077. 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, 2016, the company's quarterly report on Form 10-Q for the first quarter 2017 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 Rick Swartz..

Thanks, Kristine. Good morning, everyone. Welcome to our first quarter 2017 conference call to discuss our financial and operational results. I will begin by providing a brief summary of the first quarter results and then turn the call over to Betty Johnson, our Chief Financial Officer, for a more detailed financial review.

Following Betty's discussion, Tod Cooper and Jeff Waneka, Chief Operating Officers for our T&D and C&I segments will provide an industry outlook and discuss some of MYR Groups' opportunities going forward. I will then conclude with some closing remarks and open the call up for your comments and questions.

As you saw on our press release, MYR Group's revenue increased 18.3% for the first quarter of 2017 when compared to the first quarter of 2016. However, our gross profit and net income were down compared to the same quarter last year.

In a number of geographic areas, equipment utilization and productivity were negatively impacted by weather, and the timing and sequencing of small to medium sized projects. Margin was also negatively impacted by slower-than-expected ramp-up of work associated with certain growth initiatives.

While the workforce in these new areas is improving, we did experience some productivity issues initially as we brought on board new people and instituted new processes.

While we are not satisfied with our first quarter performance, we expect improved performance through the remainder of 2017 due to our healthy backlog, the steady bidding climate in both our T&D and C&I market segments and a variety of viable project opportunities in new and existing markets.

We also remain focused on strong project execution and a disciplined approach in our bidding activity. MYR's backlog at the end of the first quarter of $660.9 million declined slightly from our record backlog of $688.8 million in the fourth quarter of 2016, a decrease of 4.1%.

However, year-over-year our backlog grew 52% in the first quarter of 2017 compared to the first quarter of 2016. Throughout the first quarter, we identified attractive opportunities that should allow us to further expand the breadth and depth of our offerings in new and existing territories.

We progressed in our efforts to integrate Western Pacific Enterprises into the MYR Group of companies and are excited about the value this acquisition brings as work to expand our T&D and C&I service offerings in Western and Central Canada. Looking ahead, we remain optimistic, as the market outlook remains strong throughout this year and into next.

And we believe we are well positioned to win our share of project opportunities in both our T&D and C&I market segments.

Industry activity and trends continue to point to continue investments in electrical infrastructure, which supports the ongoing execution of our three-pronged strategy of prudent capital allocation for acquisitions, organic growth and return of capital to our stockholders.

We also believe our commitments to developing skilled teams, working safely, investing in needed resources, expanding our client base, strengthening existing relationships and maintaining a solid financial position will lay the foundation for future growth and allow us to deliver strong returns to our stockholders.

Now, Betty will provide us financial results for the first quarter of 2017..

Thank you, Rick, and good morning, everyone. Our first quarter 2017 revenues were $300.1 million, which represents an increase of $46.5 million or 18.3% compared to the same period of last year.

The increase was primarily due to higher C&I revenues in our new markets including those related to the Western Pacific Enterprises acquisition and our established C&I markets. Additionally, T&D revenues increased primarily due to the higher distribution revenues.

T&D revenues were $195.7 million, an increase of $12.7 million or 7% compared to the same period last year. The breakdown of T&D revenues was $141.4 million for Transmission and $54.3 million for Distribution. C&I revenues reached a record high at $104.4 million, an increase of $33.7 million or 47.7% compared to the same period last year.

Our overall gross profit was $25.7 million compared to $27.3 million in the first quarter of 2016. The decrease in gross profit was primarily due to lower overall gross margin, partially offset by higher revenue. Our gross margin was 8.6% in the first quarter of 2017 compared to 10.8% in the same period last year.

The decrease in gross margin was largely due to declines in efficiency, due to weather impacts in many of our markets and a higher mix of smaller, shorter duration T&D work. The shift in the mix of work duration also caused a decline in our fleet utilization, and increased mobilization and demobilization costs.

These impacts were partially offset by settlements related to previously unrecognized revenue on a project claim and pending change orders.

Changes in our estimates of gross profit on certain projects resulted in a gross margin increase of 40 basis points in the first quarter of 2017 compared to a decrease of 60 basis points in the first quarter of 2016. SG&A expenses were $25.8 million compared to $23.9 million in the first quarter of 2016.

The $1.9 million increase was primarily due to $2.3 million of cost associated with our expansion into new geographic markets and higher payroll costs to support operations, partially offset by lower bonus and profit-sharing costs.

Additionally, $1 million of costs associated with activist investor activities were incurred in the first quarter of 2016. SG&A, as a percentage of revenue decreased to 8.6% for the first quarter of 2017 from 9.4% for the first quarter of 2016.

As previously discussed, on October 28, we completed the acquisition of substantially all the assets of Western Pacific Enterprises. The purchase agreement also included contingent consideration provisions for margin guarantee adjustments, which are based upon the performance of certain contracts subsequent to the acquisition.

During the first quarter of 2017, we recorded other income of approximately $900,000 related to this margin guarantee adjustments on certain contracts. We had an income tax benefit of $400,000 in the first quarter of 2017 compared to an income tax provision of $1.2 million in the same period of last year.

The tax benefit in the first quarter of 2017 represented 42.7% pre-tax income compared to an effective tax rate of 38.6% in the first quarter of 2016. The tax benefit was caused by excess tax benefits of approximately $800,000 pertaining to vesting of stock awards and exercise of stock options. Due to our adoption of Accounting Standards Update No.

2016-09, is excess tax benefits from stock compensation are no longer recorded to additional paid-in capital, rather they are included in our current tax provision as a discrete item. Net income was $1.2 million, or $0.07 per diluted share, compared to $2 million or $0.10 per diluted share in the first quarter of 2016.

EBITDA was $11.1 million compared to $13.3 million in the first quarter of 2016. EBITDA per share was $0.67 per diluted share compared to $0.68 per diluted share in the first quarter of 2016.

Turning to the March 31, 2017 balance sheet, we had approximately $6.9 million of cash and cash equivalents, $39.6 million of funded debt and $186.7 million in availability under our credit facility. As of March 31, 2017, we had working capital of $108 million, which was a slight increase from the first quarter of 2016.

In conclusion, we had a challenging start to 2017. We believe that we have adequate capital and borrowing capacities going forward to support our working capital needs, funding requirements, equipment investments and future growth.

I'll now turn the call over to Tod and Jeff, who will provide an overall industry outlook and a view of MYR Group's opportunities..

Thanks, Betty, and good morning, everyone. As Rick stated, our first quarter T&D performance in several areas of the country was negatively impacted by weather as well as timing and sequencing of small to medium size projects. Periods of mild conditions throughout the quarter caused multiple freeze and thaw cycles on several projects.

These changing conditions resulted in lower than anticipated productivity as well as increased access and right-of-way restoration costs. We also experienced slower-than-expected ramp-ups on some of the work in the west. This impacted results, as we were not able to cover all overhead costs established to win and execute projects.

As ramp ups continue, we anticipate the gap between investment and return to narrow. Bidding and project activity in Transmission & Distribution is off to a solid start in 2017. And our backlog remains at steady levels. We see strong activity in the markets we traditionally serve.

We remain focused on expansion into both existing and new geographic areas. We are encouraged by market trends for the remainder of 2017 and into 2018, pointing to the steady bidding environment for transmission and distribution projects of all types and sizes.

A number of industry headlines in the first quarter indicate ongoing levels of significant transmission investment. For example, the regional grid operator PJM approved more than $1.5 billion in new transmission projects, which include a number of large and mid-size projects to upgrade aging infrastructure in the region.

Part of that spend will be $900 million investment by Public Service Electric and Gas, New Jersey's largest electric utility. Our ongoing work in the region bodes well for our eastern operations as opportunities come to market.

Along with the PJM announcement, the Midwest regional grid operator, MISO, announced 383 transmission projects valued at $2.7 billion developed [ph] and approved by its board - or have been approved by its board.

These projects include regional upgrades to existing transmission lines along with new lines to relieve congestion and deliver renewable energy resources.

This will provide opportunities for MYR as we are well positioned within MISO's footprint with the strong operational presence as well as relationships and experience with utility clients throughout the region. In addition to approved plans by these regional grid operators during the first quarter.

Several of our utility clients also made announcements of current and future capital investments during the first quarter. Xcel Energy announced plans to make the largest multistate investment in wind capacity in the U.S., proposing 11 new wind farms in seven states, which would add 3,380 megawatts of new wind generation to its system.

These wind investments are in Xcel Energy's Colorado, New Mexico and Texas markets as well as the Upper Midwest.

MYR Group subsidiaries have a long track record of constructing substations and transmission lines throughout these areas, and we believe the uptick in wind projects over the next several years will translate to a number of new opportunities.

FirstEnergy also announced planned investments of approximately $975 million in infrastructure projects to enhance and strengthen its system. These investments are targeted toward its operating units primarily based in Pennsylvania.

Our established experience and strong presence throughout Pennsylvania should help us to capture our share of these opportunities.

Moreover, in the first quarter, Alliant Energy also stated that its updated capital expenditure plan includes up to $5.6 billion between 2017 and 2020 on a wide range of capital projects including grid modernization, improvements to its generation fleet and new investments in wind and solar projects.

One of our largest clients over the past several years, ITC Holdings announced through its new ownership company, Fortis, that it expects to invest $3 billion in 2017, which will include its MVP projects in the Midwest.

Eversource, another MYR Group client, which serves customers in the Northeast announced plans to invest further in its transmission assets. Eversource's capital budget of $2.71 billion for 2017 is slightly ahead of its 2016 budget, and includes $950 million in transmission investments for 2017.

We believe these planned current and future capital investments by our utility clients indicate a strong bidding environment for transmission and distribution projects.

In addition to major investments announced from utilities and regional grid operators, we attract larger transmission projects that are proceeding through the regulatory and permitting processes and we are pleased to see progress on these projects move to the construction phase.

Recently, Pattern Energy announced that its proposed Southern Cross transmission project to generate $3.9 billion in direct and indirect economic benefits to the surrounding region.

The 500 KV transmission line intended to bring wind power to the southeastern United States is planned to begin in Eastern Texas and terminate near the border of Alabama and Mississippi.

We believe the study, like the one released by Pattern, point to a positive benefits that these major transmission projects can have on multiple areas of the country.

In March, National Grid announced their proposal for the Granite State Power Link, the 170-mile transmission line that would extend from Vermont to New Hampshire, and deliver up to 1,200 megawatts of clean energy to their customers.

This project, which is planned to be serviced - to be in service by the end of 2022, offers MYR Group another great bidding opportunity as we have a long track record of building transmission lines throughout the Northeast. On the Distribution front, growth in demand for our services remains steady in a wide range of regions throughout the U.S.

Improved economy, utility investments in technology and the strong housing market translate to needs for new systems, upgrades and expansions. We continue to perform a significant amount of distribution work, under a number of multiyear contracts and alliance agreements, and anticipate a strong market into the foreseeable future.

In summary, our current project activity and industry developments provide a solid foundation for our continued growth as one of the few contractors with the expertise, resources and financial strength necessary to build North America's most challenging electrical infrastructure projects.

While timing of project development is variable, we look forward to pursuing and securing projects of all sizes in 2017 as we expect these investments will continue to be driven by the need to increase grid reliability, replace aging infrastructure, relieve congestion and deliver new generation resources.

I will now turn the call over to Jeff Waneka, who will provide an overview of our Commercial and Industrial segment..

Thanks, Tod, and good morning, everyone. Thanks, everyone, for your time today. Activity in our C&I segment remain consistent throughout the first quarter, with all divisions experiencing steady bidding activity and encouraging communication about future prospects.

In February, new designs contracts at architectural firms posted their largest monthly gain in our two years according to the American Institute of Architects. At MYR, we believe this outlook speaks positively to the potential we see for C&I growth in 2017.

[Technical Difficulty] markets, California and Washington, announcements on new infrastructure spending bode well for continued growth.

California's governor recently signed landmark legislation titled the Road Repair and Accountability Act of 2017, which invests more than $5 billion a year over the next 10 years on road repairs, safety projects and transit upgrades.

This legislation is in addition to Measure M passed by California voters in November, collecting another $0.005 sales tax for the Los Angeles County Traffic Improvement Plan. This funding will be used to expand bus and light rail systems, while also delivering highway improvements to ease congestion.

Also, last November, Seattle area voters approved $54 billion Sound Transit 3 proposition, which adds rapid bus service lanes and 64 miles of light rail to the region's transportation network.

While the timing and value of awards will vary, these major funding decisions along the West Coast continue to bolster our confidence in our investment in this region. Today, our transportation experts are engaged in significant design build pursuits in Vancouver, Washington, California and Colorado.

In the first quarter, we captured new work on transportation projects in both Colorado and Arizona that represent the new era of advanced technology and sophisticated communication systems, which we are well suited to deliver.

We believe our proven experience with this type intelligent highway technology makes our resume particularly attractive to clients as one of the few select contractors with this expertise. In our high-tech [ph] group data center projects throughout the Western U.S. are in a state of rapid growth and expansion.

And we expect to see several opportunities due to our established client relationships and specialized expertise. For instance, in the first quarter we mobilized crews on Phase 2 of the [Apple Childen] [ph] data center in Phoenix, and anticipate additional opportunity for Phase 3 scheduled to procure in 2017. In Colorado, announcements by J.P.

Morgan and other notable data center clients, give confidence to our forecast that greenfield and retrofit projects are on the horizon, increasing our opportunity throughout 2017. High-tech manufacturing continues to build momentum in 2017.

The most notable project - most notable potential project is a $7 billion investment by a large semiconductor manufacturer, on an existing fab plant in Arizona. MYR has crews at this site, performing discovery and make ready scopes of work, while procurement efforts continue with key general contractors.

And in Colorado, we are pursuing a large-scale aerospace manufacturing plant that is expected to be awarded in the second quarter. Healthcare work shows no signs of slowing down. Several new project opportunities have been announced and multiple facilities are undergoing expansion and renovation.

This includes the recent award of another expansion on the Eastern Maine Medical Center in Bangor, Maine. Our depth of experience in this sector, combined now with Western Pacific Enterprises' vast healthcare experience, positions as well for new project awards in 2017.

Additional opportunities that suit our expertise include new aviation projects, as major airports announced plans to enhance the traveler experience and increased airfield operations.

We are also seeing new water treatment and water storage projects in a number of our regions plan for release in 2017, as well as several gaming and entertainment oriented projects throughout Nevada and our other target markets. Looking ahead, we expect strong growth to continue in our new and established markets.

We expect that our core competencies in healthcare, data center, commercial, industrial, aviation, transportation and manufacturing facilities will help us capture our share of these opportunities across the country. We will prepare by staying abreast of emerging markets and new technologies.

And refine our expertise to solidify our industry reputation as one of the few contractors with the abilities necessary for these highly complex endeavors. I'll now turn the call back over to Rick, who will provide us with some closing comments..

Thank you for those update, Betty, Tod and Jeff. Although we are not satisfied with our results in the first quarter, we expect improved performance throughout the remainder of the year. We believe we are beginning to recognize the benefits of our efforts to strengthen our position in the marketplace.

Moving forward, we believe that expanding organically and through acquisitions, refining our capabilities and maintaining our operational reputation and financial strength will remain the key factors that positions MYR Group for ongoing success.

On behalf of Betty, Tod, Jeff and myself, I sincerely thank you for joining us on the call today and for your ongoing confidence in the MYR Group. I look forward to updating you on our progress next quarter. Operator, we are now ready to open the call for comments and questions..

Thank you. [Operator Instructions] Our first question comes from the line of Tahira Afzal of KeyBanc Capital. Your line is now open..

Hi, folks. I guess, the first question for me is, as you look at your underutilization, would love to get an idea of how fast that can be addressed. I assume the weather nuances [ph] go away hopefully into the second quarter. So would really like to get an idea of how we should be thinking about margins and the recovery timeframe..

I'll start out. And then I'll let Tod add a little bit to it. But on the weather front we definitely hope that we don't experience in the second quarter, what we experienced in the first. As Tod was saying, we had a lot of freeze-thaw cycles. That side went through; had an impact on our equipment utilization.

And then startup of the smaller and mid-size and the handiness of the projects, there were some gaps in there. So we didn't have perfect alignment. So we definitely hope to see that improve. The market looks strong, when we see the side of bids coming out, and we are positive on that.

As far as the equipment utilization, we are seeing an improvement in our equipment utilization. We are seeing that trend pick up. We are definitely not at an all-time high as far as equipment utilization, but we are seeing a trend in the right direction..

Okay, great.

And, I mean, if I was to put all the fact together, I mean could we be sort of going back into the margin - gross margin zone we have seen you guys sort of showcase over the last eight quarters or so? So could we be heading back at least in the second quarter into that 10.5% plus margins zone?.

That's our goal. I mean, it is to get back there and hopefully exceed that as time goes on. As I said, our equipment utilization isn't at our all-time high level. So if you go back in quarters that's not - if you go back three or four years that's not at that all-time high. So again, we are trending up from where we were.

We also have some large - we have a large project in Texas. We talked about CTT that have a high material component. And that material component, as we said before, has kind of a lower margin on that pass through cost. There is less risk of us. There is - it's a known entity. So that will be reflected in our margins going forward.

But again, the trend should be upward. And as we said, we really forecast improved results as we trend through this year..

Got it. Okay. Thank you. And I'll hop back in the queue..

Thank you. Our next question comes from the line of Andy Wittman of Robert W. Baird. Your line is now open..

Hi, good morning. Yes, I couldn't think of anything else to talk about. So I thought I would just talk about the weather. The growth initiatives that you're talking about in terms of the electric transmission business are interesting.

But can you quantify how many millions or the dollar amount that the weather may have caused you, because it look likes the revenue was actually pretty good. So it looks like you got done with probably what you need to get done in the quarter, but it just might have cost you more.

Is that the right way to think about that and can you quantify that dollar amount from the weather?.

We don't quantify the dollar amount, I mean, I think you can see it in our overall results when you compare it to last year. There wasn't a, what I call, shift in our work. Some of our distribution work increased, but other than that, there wasn't a big shift. The weather impacted both our utilization and our crew.

So it did have an impact on our productivity. But it also had an impact overall on our overall margins. And, I guess, we are doing everything we can to balance that. But again, district by district, we don't give that information and we don't quantify kind of the overall equipment impact that we have.

Betty, you got anything to add on that?.

No. I just - when you're talking about the jobs, also the right - not only productivity, but even that right-of-way cost, just….

The repairs and that part, yeah..

Yes, the repairs and that..

Okay.

Was there a benefit from weather in that? Was there any storm work that you were able to pick up in the quarter that maybe should be called out as one-time or high profit margin work that was executed in the quarter?.

Nothing that I would say would be outside of any other quarter. I mean, we always have some storm work. Again, a lot of our crews are part of the - or a lot of our clients are part of the mutual assistant side. So they tell us when we can be released or not.

So if storms are coming into their area, they don't always release us to go work on somebody else's this property. So it's kind of where the storms are at and how that benefits us, but we would have called it out if it was a big side gain on this quarter..

All right. Just this other question on those growth initiatives, you obviously made the decision over last few years really just to organically grow greenfield operations. It sounded, Rick, like in your commentary that you're starting to see a little bit of lift to cover those investments.

Did we hear that correctly? And can you just give us what your view is about how this year plays out? It felt like it was a bit of a drag here in 1Q, but is it still a drag in 2Q and 3Q? Or do you start covering those and then ultimately getting some leverage by the end of the year?.

Yes. It's definitely our goal to cover that and have that uplift by the end of the year. As I said last year, when you looked at kind of our investment, I think if you go back in some of our past commentary, we said, last year that our goal was to have the majority of that overhead covered through revenue we're receiving on the projects.

That's still are our goal this year. We continue to expand where we see opportunities and invest in those teams, because some of the areas our people have talked about before and California and some of those areas, we see as rapid growth areas. But we also got to have teams in place that can bid and execute that work.

So as those projects come onboard, we add people, we make the changes we need; we implement our processes and the customers' processes and procedures. It takes a little while to do that. But we do see it as still a positive market. We are not changing our plan or our direction of where we were headed..

Okay. So certainly the goal is there to cover it.

But is the reality it's - have you won the work or you close to winning the work now to start covering it?.

Yes. The work is starting to ramp up. And I would say in all the organic areas, the work is starting to ramp up. Again, as we've said in the past, the timing of the awards, the size of the awards, we're not always in control of. But we are starting to receive work in all of the geographic expansion areas..

Okay. Got it. I'll leave it there for now. Thank you..

Thank you..

Thank you. Our next question comes from the line of Bobby Burleson of Canaccord. Your line is now open..

Yes. Good morning..

Good morning..

Good morning..

So just a couple of quick ones. Curious about the shift in work, and you talked about mix going to smaller shorter timeframe work in the T&D segment.

Has that already started to shift back to where you had expected it to be, and so are you already kind of seeing the benefit on the utilization of equipments there?.

I'd say for the last year-and-a-half, we've always said on every call, we've done that that we see the shift going from the large project to the mid to small size projects. So the large projects are still out there, permitting other things or kind of delaying the awards. So we still see it as a strong market for large projects.

But our mix of mid and small work, really the issue when you have that is the equipment utilization side, those have - be pulling wire for a set amount of time, maybe two, three months or six months, unlike a large project where we move on our major fleet components and have them there for a year-and-a-half doing the same type of work.

So you see the on and off, and then you see the mobe and de-mobe cost of that equipment. And that does have an impact in us and with us. And I think we do everything we can with our clients to line up the end of one project in the beginning of another.

And we try to maintain that throughout our centralized fleet, make sure we're moving equipment to try to keep it the most utilized we can. But there are points like last quarter, where we had gaps in kind of the ending of projects and the beginning of others. So our backlog remain strong, we are positive on that.

We see lots of activity on the bidding side, but aligning those projects is sometimes beyond our control..

Okay. And then, in some of the organic growth initiative, headcount sounds like maybe you guys are making some changes to people.

Is that because maybe you're not getting the results, you're expecting? Something didn't come through in terms of project awards or what kind of change here in last quarter to prompt you to make those changes?.

Well, I would say we are - as a company, we are all always balancing our SG&A costs. We are always looking at our overhead expenses. And good people were moving around the country. We don't get rid of good people.

But as you ramp up on certain work, and you take and you go into either get a project in an area or you even go into a new geographic area, you're going to be hiring people, make sure they fit your culture and your expectations. And you're going to make the changes when you need. So I wouldn't say it's something new for us.

It's a continuing cycle that we do on every project we have. We just call it out that - as you - especially new geographic areas you ramp up, you are going to be hiring people that need to fit our expectations and match them. And we're going to make the changes when we need to..

Okay. So it sounds like your expectations weren't met.

You guys are being very proactive there?.

We try to be proactive. We challenge our managers to always set the expectations and hold people accountable..

And, Rick, [what you said] [ph], you say it would be not only - that would be the office in the field or like - right, not just the heads that you were talking about, stars, [ph] managers..

And then just one last quick one in terms of some of the legislative positives that have happened in California transportation bill, et cetera.

Wondering timing of when you see that flowing through to your kind of bid opportunities and work opportunities, is that sort of a late 2017 opportunity or more meaningful in 2018?.

I think on the transportation side the bill they've announced, everything is approved. Now, everything is in the work. On the design side, we are starting to see some activity. We are in talking to the engineering firms. And I'll turn this over to Jeff, he can add a little bit of color to it.

But we are seeing them - their ramp up on the engineering side, on that development side. So we see some packages coming out in 2017, but I'd say, there is even more coming out in 2018.

Jeff?.

Yes, I agree, Rick. There is a potential for some 2017 spend. I think the positive is that we're being looked at as a resource for the design teams to call upon, to join their effort in putting these projects together, which gives us a very good opportunity to win that work.

I think it's primarily going to be 2018 and beyond where most of that is going to get spent..

Thank you..

Thank you..

Thank you. Our next question comes from the line of Noelle Dilts of Stifel. Your line is now open..

Hi, guys. Thanks.

So when you look at the transmission side of the business, given that some of these small, that there haven't been a ton of large projects in the market, and that you're seeing some delay there, have you noticed that conditions or terms of pricing have gotten more competitive as we've seen during times in the past? And can you just discuss sort of what you're seeing in terms of the competitive environment and the competitive intensity just overall in transmission both on the large projects side and small to medium?.

I think it remains competitive on the large side, I mean there is - as we've always said, there are four or five players that can do the extremely large projects. We know who those are. I think everybody understands what it costs to do those jobs. So we don't quite see the pressures on that side, as we see on the small to medium size projects.

Though they are continued geographically, there is some pressure in some areas. Others are - they're very busy areas, where the pricing remains high, so - or somewhat high, but then you're competing for resources. So we try to balance that out. We try to look at it.

But I've really seen no changes, I would say, from this quarter to last quarter, Noelle..

Okay. And then maybe just some updated thoughts on the Trump administration, the Clean Power Plan, thoughts around that.

And how you think the absence of a Clean Power Plan might impact the industry?.

Well, there is still - on the reliability side, on the aging infrastructure side there is still a need to build lines. Every utility client we talk to, still have that need, where we've replaced lines that are almost 100 years old this last year. So there are still very old lines out there. So we see that need.

As far as the Trump administration and what gets approved, we hope for positive things. We hope that side helps the permitting and that side of the project. The Clean side I really at this point haven't seen any changes.

And it takes so long to get legislation through or changes, that I think it's more from our standpoint we continue to monitor it, but it's a wait-and-see kind of proposition..

Perfect. That's helpful. Thanks..

Thank you. [Operator Instructions] Our next question comes from the line of Jon Braatz of Kansas City Capital. Your line is now open..

Good morning, everyone. Rick, over the last year-and-a-half you spent a lot of time and effort in some organic expansion, new offices and so on.

Are you looking to add more - add additional offices, more greenfield facilities at this point or is it really you're going to focus on digesting and integrating and improving what you currently have?.

Our primary focus is to digest, integrate and expand the ones we have today. It does that mean for the right opportunity that we won't expand into a new area.

If a client wants to take us there, if we see a big opportunity where we can grow our business, and our people can put together a successful well vetted business plan, I am not - myself or our board is not out to tell them no. But it is going to be a well-vetted business plan that allows for future long-term growth..

Okay.

For the most part, the operations that you've opened over the last year-and-a-half, are the sort of the fixed cost, the overhead in place and it's just now a matter of adding the, if you want to call it, variable labor to generate the results?.

Partially, I mean, it's always that balance though between having the right resources in place. And when you bring on those - then manpower to actually do the work. So you're going to have an amount of overhead that it takes to get the work. You got to continue. Then they got to manage that work.

So you're going to have to add a little more on our overhead side, so that they can, not only manage, but they can procure new work and expand those geographic areas, while you add the manpower to actually do the work. That makes sense..

Okay, okay. And then lastly, on the C&I piece of business, the outlook looks fairly strong.

What are you seeing on the pricing front? How competitive is the market and are there certain regional markets where things are getting a little tight?.

Well, we compete - again, I'll let Jeff add to the end of this. But we compete kind of in regional segments anyway, so western United States and then E.S. Boulos in the northeast. So those are the areas that were in the markets currently for C&I. So when we do that, we see those as still competitive areas.

We've always said that even in busy times, the C&I margins don't fluctuate like we see in the line margins. Fluctuate and basically the cost of entry is so much lower on the C&I component than it is for the Transmission & Distribution side. It's not as capital intensive to get into.

Jeff, do you want to add to kind of the areas you're seeing and where you see margin?.

Well, we are definitely seeing some areas tighten up as far as the manpower availability. And we hope that that sometimes also improves our opportunity in those areas. But it is region by region, and area by area, and then also depends on what type of project that we're pursuing at the time as to what our ability is to leverage better margins..

Okay. All right, thanks very much..

Thank you. And our next question comes from the line of Andy Wittman of Robert W. Baird. Your line is now open..

Great. Thanks for taking my follow-up, guys. There are some sizeable merchants, T&D lines that are out there, sizeable enough that, I don't know, maybe they could probably use several contractors on them. While the timing on some of them is kind of uncertain, they seem to be getting closer to happening.

I was just wondering if you could have role on some of those merchant lines..

Yes, we're actively pursuing those and chasing those same projects. As you said, some of them are large and could add multiple contractors on them. Some could be teaming arrangements with other contractors.

So I would say, we're looking at every variable on those projects and they're on our list, and we've got a marketing and operational team chasing those projects every day..

Some of those have actually got some kind of handshakes if they don't have a contract, because they don't have a final investment decision yet.

Would you - are the discussions advanced enough for you to say that you will or you have high confidence that you can have a role on some of those?.

I think we have confidence we'll have a role on some of them. I wouldn't say, they're not advanced enough that I could ever give any details on those, but as I said, our teams are pursuing them..

Yes, fair enough. Great. Thank you..

Thank you. And I'm showing no further questions at this time. I'd like to hand the call back over to Rick Swartz for any closing remarks..

Thank you everyone for participating in today's call. As always, I'd like to thank our strong management team and our employees for their hard work and our stockholders for their continued support. I don't have anything further. We look forward to working with you going forward and speaking with you again on our next conference call. Thank you..

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