May 10, 2012
Operator
Good morning, everyone, and welcome to the MYR Group First Quarter 2012 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.
Philip Kranz
Good morning, everyone. Thank you, and good morning.
I'd like to welcome you to the MYR Group conference call to discuss the company's first quarter results for 2012, which were reported yesterday. Joining us on today's call are Bill Koertner, President and Chief Executive Officer; and Paul Evans, Vice President and Chief Financial 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 16, 2012, at 11
59 p.m. Eastern Time, by dialing (855) 859-2056 or (404) 537-3406 and entering conference ID 75315152.
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 16, 2012, at 11
Before we begin, I want to remind you that 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 quarterly report on Form 10-Q for the first quarter of 2012 and in yesterday's press release.
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 16, 2012, at 11
Also, 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.
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 16, 2012, at 11
With that said, let me turn the call over to Bill Koertner.
William Koertner
Good morning, everyone. Welcome to our first quarter 2012 conference call to discuss financial and operational results.
I'll provide a brief summary of the first quarter results before turning the call over to Paul Evans, our CFO, for a more detailed financial review. Following Paul's discussion, I will provide some additional information and an outlook for the industry.
William Koertner
I'm pleased to report that our revenues grew to a record $240.2 million in the first quarter of 2012 from $150.3 million in the first quarter of 2011. This represents a 59.8% increase.
All of this growth was organic as MYR has not made an acquisition for several years. Diluted earnings per share were $0.29 for the first quarter of 2012 compared to $0.21 for the first quarter of 2011.
Meanwhile, MYR's backlog increased 6% from $603.9 million reported at March 31, 2011, to $639.9 million at March 31, 2012.
William Koertner
Our results were gratifying and we believe validate the strategy we adopted about 5 years ago to position the company to benefit from a major ramp-up of transmission investment across the country. We remain focused on executing the projects already in our backlog, as well as bidding new work.
We are targeting project opportunities that best fit our resources and will allow us to earn operating margins that are representative of the current market dynamics. We expect large transmission project opportunities to remain steady for at least the next several years.
However, the large project bidding environment was less intense in the first quarter than the bidding activity we experienced in the last half of 2010 and the first half of 2011. Meanwhile, bidding activity for small to medium-sized transmission projects continues to be strong across the country.
William Koertner
Some of the large transmission projects such as the CapX2020 work in Minnesota are being divided into smaller segments for awards as opposed to single awards for the entire line. Therefore, our backlog may not materially increase in any one quarter as it relates to particular large projects.
As such, we will include the smaller segments of the overall larger projects in our backlog when contract terms are finalized. We expect the business environment for our distribution business and our C&I segment to continue to be challenging as some of our customers remain affected by regional economic conditions.
As a result, our margins continue to be pressured due to a competitive environment, and we expect this environment will continue through 2012.
William Koertner
We believe MYR maintains one of the strongest balance sheets in the industry, providing us with the working capital and investment capability necessary to support our growth. We believe our strong balance sheet, coupled with the investments we made in specialty transmission equipment, tooling and workforce development, place us at a competitive advantage to capitalize on new transmission investments.
William Koertner
Now Paul will provide details on the first quarter 2012 financial results and then I'll be back to provide some additional insight on current market conditions and our perspective for the future of MYR. After that, there will be an opportunity for you to ask questions.
William Koertner
So with that, Paul, please begin.
Paul Evans
Thank you, Bill, and good morning, everyone. Yesterday, after the market closed, we announced our 2012 first quarter results.
As Bill previously mentioned, our revenues for the first quarter of 2012 were a record $240.2 million, which represents an $89.9 million increase over the same period in 2011. On a percentage basis, our first quarter revenues increased 59.8% over the first quarter 2011 revenues.
Paul Evans
From a revenue segment standpoint, our T&D revenues increased $87 million to $205 million, and our C&I revenues increased $2.9 million to $35.2 million compared to the 2011 first quarter. To give some historical perspective on how our business has changed, 43.6% of our revenues came from transmission in the first quarter of 2008.
By contrast, our transmission revenue for the first quarter of 2012 represented 71.4% of our total revenues.
Paul Evans
Focusing on the T&D segment, revenues were $171.6 million for transmission and $33.4 million for distribution in the first quarter 2012 compared to $80.5 million for transmission and $37.5 million for distribution for the first quarter of 2011. The first quarter 2012 increase in transmission revenues, primarily related to a number of large transmission awards in late 2010 and early 2011 that are now in various stages of the respective construction cycles.
Lower distribution revenues related to a decrease in work on master service agreements, which in turn was slightly offset by an increase in storm work.
Paul Evans
Our C&I segment revenues increased by 9.2% in the first quarter of 2012 versus the first quarter of 2011 due primarily to a large number of inside electrical jobs in the hospital and refinery industries.
Paul Evans
Our gross profit in the first quarter of 2012 increased to $26.1 million from $21.6 million in the first quarter of 2011. However, our gross profit as a percentage of revenues declined to 10.9% versus 14.4% in the first quarter of 2011.
The decline in gross margin was primarily due to an approximately $5.8 million in above-average margins recognized in the first quarter of 2011 on a few large transmission projects that were in the final stages of completion last year. Comparing the first quarter of 2012 to the fourth quarter of 2011, our gross margin increased to 10.9% from 10.5%.
Paul Evans
First quarter 2012 SG&A expenses were $15.9 million compared to $14 million in the first quarter of 2011, primarily due to increases in employee compensation related to higher employee headcounts, increases in stock compensation costs and increases in employee-related benefit costs, including group medical insurance. Our SG&A as a percentage of revenues declined to 6.6% in the first quarter of 2012 compared to 9.3% in the first quarter of 2011.
Paul Evans
First quarter 2012 EBITDA increased to $16 million or $0.76 cents per diluted share from $11.9 million or $0.57 per diluted share in the first quarter of 2011. Our provision for income taxes increased to $3.8 million in the first quarter of 2012 compared to $2.9 million in the first quarter of 2011.
Our effective tax rate decreased to 38% versus 39.4% in the first quarter of 2011. The decrease in the effective tax rate was associated with certain discrete tax adjustments and lower state income taxes.
Paul Evans
First quarter 2012 net income was $6.2 million or $0.29 per diluted share compared to first quarter 2011 net income of $4.5 million or $0.21 per diluted share. In the first quarter of 2012, we are best invested in additional $8.3 million in property, plant and equipment, which compares to $12.2 million in the first quarter of 2011.
We expect that our capital spending in 2012 will be slightly less than our 2011 capital spending, as we continue to expand our fleet for the ongoing transmission build-out. We believe our strategy to invest in equipment and tooling will result in better execution on current projects and position us to capture additional business in the coming years.
Paul Evans
We had higher bookings in the first quarter of 2012 compared to the fourth quarter of 2011 in the T&D segment, which were offset by a decline in bookings in the C&I segment. T&D bookings in the first quarter of 2012 were $156.1 million, and C&I bookings were $31.3 million in the quarter.
As we have discussed before, much of our revenue never flows through our quarterly backlog reporting. This is because the award of work, as well as the execution of the work, all take place within the quarter.
Paul Evans
Total backlog at March 31, 2012, was $639.9 million consisting of $563.3 million in the T&D segment and $76.6 million in the C&I segment. T&D backlog at March 31, 2012, increased 7.5% compared to the backlog at March 31, 2011.
The increase in our T&D backlog was primarily due to several large transmission projects awarded to us in the trailing 12 months. C&I backlog at March 31, 2012, decreased 4.5% compared to the backlog at March 31, 2011.
As we have discussed on previous calls, our backlog only includes projects that have a signed contract or an agreed-upon work order to perform work on mutually accepted terms and conditions.
Paul Evans
Moving to the balance sheet. Our stockholders' equity increased to $222.6 million at March 31, 2012, from $215.7 million at December 31, 2011.
On March 31, 2012, we had approximately $3.8 million in cash and cash equivalents, and $157.8 million availability under our 5-year credit facility. Our cash balance declined $30.3 million from December 31, 2011.
The decline was primarily due to a $28.4 million increase in our accounts receivable, which was a result of our increased revenue and increased retainages on our large projects. The reduction of our cash balance was also a result of our decision to reduce outstanding debt by $10 million and continued purchases of fleet equipment and tooling.
As of March 31, 2012, we had approximately $17.2 million in letters of credit outstanding under the facility and no revolving loans outstanding under the credit facility.
Paul Evans
In conclusion, we believe our strong balance sheet gives us an advantage over many of our competitors to acquire new equipment and tooling, to invest in our workforce and to consider such things as share repurchases and acquisitions.
Paul Evans
Now I'll turn the call back to Bill for discussion of the overall industry.
William Koertner
Thanks, Paul. While our construction management teams continue to build several large projects concurrently in various stages of completion, our estimating teams are focused on evaluating and pricing projects throughout the country.
Transmission bidding activity remains strong in the first quarter of 2012, particularly for small to medium-sized projects. We also began to see a slight increase in electric distribution demand in certain geographical regions.
We believe the industry outlook continues to be favorable as we see ample opportunities for continued growth in transmission construction of all sizes including new lines and upgrades, as well as associated substation work.
William Koertner
With the possible exception of the Southeast, the market for major new transmission projects remains strong across the country. We believe PJM, MISO, ERCOT, SPP, NYISO, ISO-New England and Cal ISO will be strong markets for MYR for several years to come.
Each of these regional independent system operators as many large and small projects at various stages of the approval process. Federal efforts continue to move new transmission development forward.
One of these efforts is FERC Order 1000, which was passed last July and establishes a number of reforms in planning, cost allocation and nonincumbent development. We will better understand the implications of the rule as we see how FERC acts on compliance filings due this October.
William Koertner
In addition to independent transmission companies like International Transmission Company and American Transmission Company, referred to as ITC and ATC, some traditional utilities are moving forward to pursue competitive transmission development projects, particularly in response to FERC Order 1000. AEP recently announced this Transource Energy joint venture with Great Plains Energy to expand its footprint in Missouri and Kansas.
This complements their transmission investments through existing partnerships and state-level transcos.
William Koertner
Last year, Duke Energy and ATC also established a joint venture company to build, own and operate new electric transmission infrastructure in North America. Also, over the last several years, Ameren formed its subsidiary, Ameren Transmission Company, to build new transmission projects in Illinois and Missouri, which allow them to expand beyond their current footprint.
Exelon Transmission Company was also -- has also established through its parent, Exelon, for the purpose of pursuing transmission projects beyond their current service areas. NV Energy joined LS Power in the development and ownership of the ON Line project in Nevada, also known as SWIP or the Southwest Intertie Project.
These are just some examples of the transmission development activities taking place across the country.
As the needs for reliability of our nation's grid become more clearly defined and cost allocations and benefits are clarified, we anticipate the forming of additional partnerships and new transmission companies in the competitive transmission development market. The projected growth in transmission spending was reconfirmed in April when the Edison Electric Institute released its annual Transmission Projects
At A Glance report. EEI said its member utilities plan to spend at least $64 billion or more than -- on more than 100 major projects from 2011 through 2022.
This investment is only a portion of the total transmission anticipated through 2022 by EEI members, and as a sampling to highlight the industry's commitment to needed and beneficial transmission investments.
As the needs for reliability of our nation's grid become more clearly defined and cost allocations and benefits are clarified, we anticipate the forming of additional partnerships and new transmission companies in the competitive transmission development market. The projected growth in transmission spending was reconfirmed in April when the Edison Electric Institute released its annual Transmission Projects
To keep the focus on major projects, the report used a minimum project investment threshold of $50 million for transmission system projects, $20 million for transmission projects to support integration of renewable resources and $10 million for smart grid projects. Meanwhile, according to EEI, the total planned investment from 2012 to 2014 is approximately $41 billion.
This represents a 24% increase over the $33 billion estimated spend from 2009 to 2011.
As the needs for reliability of our nation's grid become more clearly defined and cost allocations and benefits are clarified, we anticipate the forming of additional partnerships and new transmission companies in the competitive transmission development market. The projected growth in transmission spending was reconfirmed in April when the Edison Electric Institute released its annual Transmission Projects
Now I'd like to shift over to our C&I business. As I mentioned on other calls, although projects are still being bid, there remains excess capacity within the C&I industry as a large number of contractors are pursuing the available work, which continues to place pressure on margins.
Our market focus continues to be health care, government office buildings, research centers, smart highway work, data centers, mining and wastewater treatment. This makes us somewhat less susceptible to the slow economic recovery at the national level.
As the needs for reliability of our nation's grid become more clearly defined and cost allocations and benefits are clarified, we anticipate the forming of additional partnerships and new transmission companies in the competitive transmission development market. The projected growth in transmission spending was reconfirmed in April when the Edison Electric Institute released its annual Transmission Projects
As always, we remain focused on creating value for MYR shareholders. We continue to monitor and make adjustments to our cost structure in an effort to ensure MYR remains one of the lowest cost and highest value providers in the industry.
Our cost structure, coupled with a steady focus on our markets, will position MYR to maximize its potential as the economy rebounds and various T&D and C&I projects move forward. Additionally, our commitment to safety, high-quality customer service and on-time execution will ensure MYR remains a valued partner for utilities and C&I clients.
That is it for now. As always, thank you for your interest and support.
As the needs for reliability of our nation's grid become more clearly defined and cost allocations and benefits are clarified, we anticipate the forming of additional partnerships and new transmission companies in the competitive transmission development market. The projected growth in transmission spending was reconfirmed in April when the Edison Electric Institute released its annual Transmission Projects
And now, I'd like to turn the call over to your comments and questions.
Operator
[Operator Instructions] Our first question comes from Tahira Afzal with KeyBanc.
Tahira Afzal
I guess I'm surprised your stock is down, you gave a fairly phenomenal performance in the first quarter. And so I guess the concerns that might be impacting your stock, you've talked about backlog opportunities being lumpy.
But on the T&D side, Bill as you look out and play out as planned, do you see backlog growth over this year and next year? And could you talk a bit about your capacity to accommodate that?
William Koertner
We certainly expect our backlog to continue to be lumpy. As you know, and I think others on the call know, our definition of what goes in backlog is not identical to everybody else that's in our sector.
We do see backlog growth over the long term. It doesn't necessarily mean it's going to be quarter-after-quarter of growth, but we do see a lot of opportunities out there as evidenced by the EEI report I referred to in my comments.
And we certainly expect to earn our fair share of that business. So I don't know if I have anything really more to add on that.
It's been a pretty phenomenal couple of years in terms of adding backlog and just now, to maintain it at its current level is no small task.
Tahira Afzal
Got it. And I've got a second follow-up.
Could you talk about how your DSOs and cash flow is going to play out for the rest of the year? Clearly, you're ramping into some large projects and that plays in certain ways on your balance sheet.
William Koertner
Tahira, I'd like Paul to answer that, if he would.
Paul Evans
Sure, Tahira. As I look at the cash flows going forward, it is true that year-over-year our DSO has increased, but I feel very comfortable that we have adequate liquidity to see additional retainages be held by our customers.
And as these projects get further into their cycle, the AR balance should decline somewhat. So I don't see any concerns for this company going into -- through this year.
William Koertner
Tahira, just to add to Paul's comment. Certainly, each contract that we have is somewhat unique.
I think the standard is that the client ask for 10% retainage on jobs. Sometimes we're successful in negotiating that to a lower number.
Oftentimes, at the start of the project, it will be 10% and then we'll reach an agreement to cap it at some point in the middle of the project. So we're constantly focused on trying to minimize the cash that we have tied up in AR, including retainage.
Operator
Our next question comes from Alex Rygiel with FBR Capital Markets.
Alexander Rygiel
Bill and Paul, could you comment on and remind us about your profit recognition for large projects versus small projects and how it differs and how you tend to be conservative at the start off projects but release contingencies through the process?
William Koertner
The accounting rules don't change because it's a small project versus a large project. The way we handle profit recognition every quarter on every project, we scrub our books and do a detailed cost to complete on that job.
And after we finish that process, every quarter, we're able to write up some projects and we always have a few projects we have to write down. So it is a pretty rigorous process we go through actually every month, but particularly rigorous on the quarter.
So that would be how we would handle profit recognition on lump-sum jobs, contracts that are primarily cost plus or unit price, that little different twist to profit recognition. But basically, we adhere to cost to complete accounting and do a rigorous cost to complete each quarter.
We do not recognize unapproved change orders. So when you have a large project and maybe have a added scope or something that might entitle us to a change order, we don't recognize that until it's been approved by the client, and we're certainly trying to get the client to approve them as we go along.
But oftentimes, the contract requires us, in some cases, to wait until the end of the project to resolve all of those pending change orders. So that, I think, has been a factor historically, that maybe has contributed to a higher profit recognition on the end on certain projects.
Alexander Rygiel
And can you remind us the timing of any upcoming large projects that could be completed in 2012?
William Koertner
Sure. Our project in Oklahoma is substantially complete now.
Our project in Kansas for ITC is well underway. That should complete by the end of the year.
I guess those would be the 2 that should wrap up this year. Our work in West Virginia and Virginia for Dominion, that's a multiple-year project.
Our work in Maine is a multiple-year project. Our work for LS Power in Texas should finish in 2013.
And the work that we're doing for NV Energy and LS Power in Nevada, I think, as everybody on the call knows, that project had the tower erection and wire setting shut down temporarily until they dealt with an engineering issue that relates to vibration on the towers. We did -- we are continuing on that job with a lot of road building, environmental work, putting foundations in, putting the anchors in.
So that project continues to move forward with all of those activities other than setting towers and stringing new wire. So that'd be kind of going around the horn major projects that are currently in our backlog.
The work in Minnesota, the CapX2020 work, as we stated on the call, that those segments are in the process of being awarded. We have a small contract to do some material yards on one of the jobs and are continuing to have discussions with the CapEx utilities on a couple of those jobs.
So that one really isn't in backlog at this stage.
Alexander Rygiel
And lastly, Bill, can you talk a little bit about pricing in the electrical transmission market and the intermediate-term outlook for profit margins in transmission over the next 12 to 24 months?
William Koertner
The market, I think, is a little stronger. It's all about execution now.
All of us in the industry have a number of projects under contract and it's all about execution. I do think there is some firming on certain projects on pricing the way we evaluate them.
There are other areas of the country where we still find way too many bidders. So that is very much a regional thing where some areas seem to be stronger from a margin opportunity than other areas.
Operator
Our next question comes from Justin Hauke with Robert W. Baird.
Justin Hauke
I just wanted to dig a little bit into the revenue which is, obviously, very, very strong and I guess just a couple of questions to kind of get our arms around it a little bit. I guess, first, was there any pull forward of just moderate weather that's allowed you to do more work that kind of smoothed maybe the traditional seasonality from here?
So that'd be kind of the first question. And the second one is, to the extent you could quantify maybe how much of the revenue was from the projects you defined as large projects of over $10 million, how much of your revenue this quarter was from those projects?
William Koertner
Let me start off on that and maybe Paul will jump in with some added color. Certainly, throughout much of the country, we experienced a much more mild winter than what any of us expected.
That is both a good news and bad news situation. I think most people would think it should be good news.
In certain areas, certain projects, we bid the job as though we're going to have frozen ground for several months during the winter, and that makes moving heavy equipment and material easier. In some of those areas, we got very little frost in the ground.
So we had probably more environmental issues to contend with. So in some cases, the weather helped us.
Other cases, it was -- made our work more challenging. Some of our jobs have significant contractor-provided materials.
Normally, the typical utility job. The utility would provide the poles and the wire and the insulator and a lot of the hardware for a job.
In some of our work, that scope for providing material has been assigned to us. So that has a little more revenue potential as we install that material.
Not only are we recognizing the cost for our labor and equipment, we're also recognizing the cost of the material because that's part of our scope. So that, I think, has probably been a source for helping drive some of the revenue.
I guess, Paul, you got anything more you want to add on that?
Paul Evans
Yes, sure. Justin, your question along the lines of how much the total revenue was sort of contributed by the large projects, what we look at is about -- maybe 15 of our projects make up about half of our revenue in the quarter.
And that was consistent -- or roughly consistent with Q4 of 2011 and Q1 of 2011. Our top 15 projects made up about 31% of our revenue.
So as these larger projects get further into their cycle, this is something that we have expected to occur.
Justin Hauke
Got it, that's actually very helpful. The second question I had, I guess it's maybe a little more theoretical, but I noticed that several of your peers have pulled out of their multi-employer pension plans.
I know that you're involved in a couple of those plans. And I guess just any thoughts on the funding status there, and any change in maybe how you might organize those plans going forward.
Paul Evans
As we look at that -- I mean, we're certainly aware of some of our peers, that their issues with the multi-employer plans, but our contributions to those plans have been immaterial, I mean, less than $50,000 in any 1 year. And so we don't see it as a material issue for us.
Operator
Our next question comes from Craig Irwin with Wedbush.
David Giesecke
This is David for Craig. I'd like to drill into the Transmission and Distribution a little bit further, piggybacking on that last question session.
Can you maybe discuss the split of the margins for the large and the small projects? And then could you talk to whether you have the labor and capacity to handle additional small T&D projects going forward?
William Koertner
Let me comment on the last part of it and then Paul can comment on the first part. Certainly, we feel we have capacity for the small to mid-sized projects, as well as additional big projects.
There's a lot of what I think the industry typically calls NERC reliability work that is upgrading 69 lines and 138 lines and 115 lines. That's an important source of business for us.
We have a number of our clients that are engaged in that and they've hired us to assist them with that. So that has been a strong opportunity for us and we think we have a lot of capacity across the country to assist our customers with that.
Paul Evans
Okay. David, to address your question, what we see on a quarter-to-quarter basis is we see growth in the margin that we've recognized on our top 15 projects.
That said, the margin on all of our other projects continues to track higher than our top 15. But with the trend that we're seeing, hopefully, that's a positive trend going forward.
But we do continue to see, on our smaller projects, higher margin opportunities.
David Giesecke
Okay. Is there a spread that you could give us a sense of between the large and the small project margins?
William Koertner
I don't think we can. I mean, that's something we don't disclose and categorize our projects by size.
As we look at projects, I mean there are a lot of ways you can group them, by region of the country, by type of service, by client, by size, and all of those things, I guess, might be somewhat interesting. That's not how we manage the business.
David Giesecke
I see. But the general takeaway then is that you are seeing margin improvements on both the large and the small projects?
William Koertner
In terms of the bidding environment, we think certain areas of the country, we see a little more favorable bidding margins available, but it isn't necessarily across the board in all 50 States. So it is a region-by-region situation.
Operator
Our next question comes from William Bremer with Maxim.
William Bremer
Can you give us an idea of what type of underlying capacity you have given the level of G&A that's currently showing?
William Koertner
The capacity on the G&A side, I guess I wouldn't view that necessarily as a constraint. But what would be potentially -- capacity constrained is whether you have the tools and equipment to do the work and whether you can find the management and the skills and resources to perform the work.
Finding the administrative support, I think, is something that -- we can expand that. As you see in this quarter, our SG&A as a percent of revenues went down only because the revenues went up so dramatically.
I think the business is scalable. So if you look at a long period of time, we achieved the growth that we think we're capable of.
SG&A should be less as a percent of revenue than maybe what it ran in the 5-year period before the transmission growth really started to ramp up.
William Bremer
Right. That's exactly what I'm looking for.
And then, Paul, if you could just help me out. Can you provide what MSAs made up for the quarter and how that compares year-over-year?
Paul Evans
That's actually something I -- I don't think we report that and we don't track our business that way.
Operator
Our next question comes from Adam Thalhimer with BB&T Capital Markets.
Adam Thalhimer
I -- really 2 questions here. Number one, Bill, how many -- maybe help us think about -- I mean, I understand it's a lumpy business, particularly when you get to the kind of megaprojects.
Can you give us a sense for how many megaprojects you're bidding right now and when you might expect to hear back on those?
William Koertner
Right now in the market, there are a couple of large projects that are active. We expect more to come out in the market in the next couple of months.
But as I've told you in the past, Adam, the period of the late 2010, early 2011, that's when the CREZ work came out and a lot of the other big things that MYR and our competitors are working on. I don't ever see that kind of bidding activity being duplicated within a 9- or 12-month period.
But we -- there are a couple of good sized jobs in the market today and we expect to see more of them as the year unfolds.
Adam Thalhimer
Okay. And then help us think through the T&D Op margin in the quarter around 8%.
You had a couple of quarters that was Q4 '10, Q1 '11 where the operating margin was closer -- was, let's call it, low teens. What was -- and that's when you finished up the first Dominion job.
I mean, is that kind of low teens margin what you think you can do in an environment where you're closing more jobs than you're starting?
William Koertner
Well, the margins, as we indicated on the call and the comparable quarter last year as we were closing out a couple of large contracts, we had some above-normal margins that we put out in our release. Hopefully, we'll be able to do the same thing as we close out some of the current large jobs that are under contract.
But in terms of a normalized margin, yes, I wouldn't necessarily say the first quarter of 2011 was normal nor would I say the first quarter of 2012 was normal. What I'd suggest you do is you look at a longer period of time, multiple years, and those things kind of balance out as opposed to trying to conclude from 1 quarter or 1 year even that what's normal.
Adam Thalhimer
What's the one thing that you -- that frustrates you maybe the market's not getting? I mean, is it the strength of small transmission work, is it the NERC reliability?
Maybe you can give us a sense for when that work-related to NERC reliability starts. And is this -- will the story kind of shift here over time as less megaprojects, but more just base transmission work and then you got distribution coming back, then C&I comes back?
I mean, how should we think about the story now that you are kind of through that bubble, so to speak, of the megaprojects?
William Koertner
I guess there's not one thing that frustrates me about the market. I -- the market is what it is and you get buyers and sellers in our stock, as well as our competitors, that -- to drive it.
And if you got somebody trying to sell, the price goes down. If you got somebody in size trying to buy, the price goes up.
So I generally think because of guys like you, the market is pretty efficient. There's a lot of information on our company out there and our industry.
I do think this NERC reliability work is going to be with us for a long time. Whether the market fully gets that or not, I don't know.
But I think it's a situation where probably a lot of things come into play, explaining why we trade where we do versus maybe a peer or some broader market index like the S&P.
Adam Thalhimer
And then on the NERC reliability, are you the -- is that like -- that offsets like one megaproject? I mean, you're thinking it's kind of a $50 to $100 million a year driver?
William Koertner
I think it has the potential of being more important than that. It's not just one utility system in one state.
There's quite a bit of NERC reliability work across the country. And it's kind of an odd way to look at it but I guess, to me, it's the equivalent of a couple of large projects.
Operator
Our next question comes from Dan Mannes with Avondale.
Daniel Mannes
A couple of quick follow-up question and I think you got this question on seasonality as it relates to what was a very strong Q1. I wanted to layer on there.
Can you also talk about the status of your projects and the potential for continued ramp in terms of your revenue recognition on projects as you move through the year? Or does this sort of mark maybe not the high point, but a plateau in terms of revenue realization on your existing backlog?
William Koertner
Dan, I don't have much more to add. I kind of went around the horn earlier in the call discussing where some of our large projects are.
I do think when you go through a quarter where your revenues are up 60% from the same quarter the prior year, that kind of thing is pretty difficult to duplicate what we would hope that -- normalize our revenues over a longer period of time. I think the industry is, and our company, is capable of growing 10% a year but it's not going to be every quarter, and you should put your ruler down because this is not a straight edge business.
Daniel Mannes
Okay. Understood.
And then real quickly, in your press release, you obviously talked about the strength of your balance sheet. Can you talk a little bit about maybe some of the opportunities there to put some capital in play to add -- either add capabilities or potentially even on the M&A side?
What would you like to add and where would you like the company to look like in 12, 18, 24 months?
William Koertner
So our balance sheet, first, is to support our internal growth. We are a company that's strategy is primarily trying to grow through organic growth and we are very cognizant on how many shares of stock we got outstanding.
And we -- that's an important number as you calculate EBITDA and earnings per share and so forth. So we're very focused on not splitting the pie up among any more shares than we have to.
So I guess second to supporting our internal growth with equipment and tooling and training before we do an acquisition. Or -- and as we consider those, the alternative is to always give the money back to shareholders.
So I don't think we would want to lower our criteria for making an acquisition to something that would not be as valuable to existing shareholders as perhaps buying back stock, for instance. In terms of the acquisition market, we see a lot of pitch books, each month and really haven't expressed publicly where we'd really like to grow.
Certainly, some acquisitions have more appeal to us beyond just the relative valuation of them. We would be looking at things that would be strategic in terms of, so not just financial, whether the deal is priced right.
Operator
[Operator Instructions] We have a follow-up question from Tahira Afzal with KeyBanc.
Tahira Afzal
So just because you account more conservatively on the backlog side, which is prudent, than some of your peers, could you talk on a sort of higher level, I guess, about your bid opportunity out there? When you combine the large projects and the small and midsize projects and you really see that opportunity versus, let's say, at this point 1 year ago, would you say that opportunity is a smaller set around the same size?
And then the second question is, when you look -- when you're looking at your market out there, how much are you factoring in? What's likely going to happen over the next, let's say, a couple of years as utilities shut down and retire -- start retiring coal power plants, starting up natural gas power plants potentially?
Is that going to be an opportunity of notable magnitude for you as well?
William Koertner
I think you're about 6 questions in that, Tahira, let me address the backlog part of it. Compared to 1 year ago, as I indicated in last half of '10, first half of '11, that's when I saw the bidding activity being a multiple of anything the industry had ever experienced.
So as you compare the first quarter or my expectation for the second quarter of 2012, will that be at the same level as the first quarter and second quarter of last year? I don't think so.
I don't think there are that many jobs that are going to be awarded during that period. But again, that period I referred to at the end of '10 and first part of '11, the industry had never seen anything like it.
And it was not a percentage greater than historical, it was a multiple times anything the industry had seen. Now back, I guess, to your question about coal plants potentially closing and whether that could have a positive impact on our industry, I guess I'm of the opinion that it could because as these coal plants get closed, the alternative probably is to put a gas plant in that area to support the load or to perhaps upgrade the transmission facility.
And in some cases, upgrading those transmission lines, so you don't have to put any plant in that location. I'm sure the utilities are all going through those analysis.
Putting the gas plant in itself will trigger some transmission work. It'll trigger some substation work so we would be the beneficiary of that.
And if they choose not to put a new plant to replace the coal plant and choose instead to upgrade their transmission facility, that might have a greater potential benefit to MYR and its peers.
Tahira Afzal
And then last question. I know that Susquehanna-Roseland is back on the map, near-term opportunities with some of your peers.
I know you've looked at it in the past. Any comment from that?
William Koertner
We have looked at that and that is a project that's of interest to us and I expect there'll be some decisions made on it probably this year.
Operator
We have a follow-up question from William Bremer with Maxim.
William Bremer
Bill, can you give us some color on your substation work, how much you did this quarter, how much you did -- what the bidding opportunity looks there -- looks like there throughout this year and next?
William Koertner
We typically roll our substation work-up under transmission. It has been, I think, pretty strong.
I don't have the details and we don't break that down, but the substation work has been pretty strong. And there are a number of substation bidding opportunities that would be sizable additions or greenfield substations that we'll be looking at this year.
Operator
Thank you. I'm showing no further questions at this time.
I would now like to turn the conference back over to MYR Group for closing remarks.
William Koertner
I, again, would like to thank everybody for participating on the call. We're very excited about the opportunities in the energy delivery markets.
We think we got the right management team and skilled resource base for all of the hard work that we see in front of us. As I indicated, now it's largely a lot about execution, to execute the jobs that we have in backlog.
And we certainly appreciate the ongoing support from our shareholders. We certainly value your interest and support in our company.
And I guess, with that, everybody have a good day.
Operator
Ladies and gentlemen, this concludes today's conference. Thank you for your participation.
Have a wonderful day.