• MYR Group Inc. Announces Third-Quarter and First Nine-Months 2021 Results

    来源: Nasdaq GlobeNewswire / 27 10月 2021 15:15:57   America/Chicago

    HENDERSON, Colo., Oct. 27, 2021 (GLOBE NEWSWIRE) -- MYR Group Inc. (“MYR”) (NASDAQ: MYRG), a holding company of leading specialty contractors serving the electric utility infrastructure, commercial and industrial construction markets in the United States and western Canada, today announced its third-quarter and first nine-months 2021 financial results.

    Highlights for Third Quarter 2021

    • Quarterly revenues of $610.2 million
    • Record high quarterly net income of $23.2 million and record high earnings per diluted share of $1.35
    • Record high quarterly EBITDA of $42.3 million
    • Strong backlog of $1.63 billion

    Management Comments
    Rick Swartz, MYR’s President and CEO, said, “Our strong third-quarter 2021 financial results included record high quarterly net income, EBITDA and EPS. We finished the third quarter with net income of $23.2 million, a 34.0 percent increase over our third quarter 2020 net income, along with increases in revenues, gross profit and EBITDA as compared to the same period of 2020.” Mr. Swartz continued, “We remain committed to executing our core business strategies while adapting and innovating to changing market conditions. We appreciate our deep customer relationships and continually leverage the full capabilities of MYR Group companies to enhance the value we are delivering and create opportunities for future growth.”

    Third Quarter Results
    MYR reported third-quarter 2021 revenues of $610.2 million, an increase of $2.3 million, or 0.4 percent, compared to the third quarter of 2020. Specifically, our Transmission and Distribution (“T&D”) segment reported revenues of $306.5 million for the third quarter of 2021, an increase of $6.8 million, or 2.3 percent, from the third quarter of 2020, primarily due to an increase in revenue on distribution projects partially offset by a decrease in revenue on transmission projects. Our Commercial and Industrial (“C&I”) segment reported revenues of $303.6 million for the third quarter of 2021, a decrease of $4.6 million, or 1.5 percent, from the third quarter of 2020, primarily due to a decrease in volume on various-sized projects in certain geographic areas.

    Consolidated gross profit increased to $83.9 million in the third quarter of 2021, an increase of $7.4 million or 9.7 percent, from the third quarter of 2020. The increase in gross profit was due to higher margins and revenues. Gross margin was 13.8 percent for the third quarter of 2021 compared to 12.6 percent for the third quarter of 2020. The increase in gross margin was primarily due to better-than-anticipated productivity on certain projects, favorable job close-outs and favorable change orders on certain projects. These improvements were partially offset by labor and equipment inefficiencies on certain projects. Changes in estimates of gross profit on certain projects resulted in a gross margin increase of 1.4 percent for the third quarter of 2021 and a decrease of 0.3 percent for the third quarter of 2020.

    Selling, general and administrative expenses (“SG&A”) increased to $53.1 million in the third quarter of 2021, compared to $51.4 million for the third quarter of 2020. The period-over-period increase was primarily due to an increase in employee-related expenses to support the growth in our operations.

    Income tax expense was $7.6 million for the third quarter of 2021, with an effective tax rate of 24.6 percent, compared to income tax expense of $6.5 million for the third quarter of 2020, with an effective tax rate of 27.4 percent. The period-over-period decrease in tax rate was primarily due to the reduction of the impact of the global intangible low tax income (“GILTI”) and a favorable impact from stock compensation excess tax benefits.

    For the third quarter of 2021, net income was $23.2 million, or $1.35 per diluted share, compared to $17.3 million, or $1.02 per diluted share, for the same period of 2020. Third-quarter 2021 EBITDA, a non-GAAP financial measure, was $42.3 million, compared to $36.2 million in the third quarter of 2020.

    First Nine-Months Results
    MYR reported first nine-months 2021 revenues of $1.85 billion, an increase of $212.8 million, or 13.0 percent, compared to the first nine months of 2020. Specifically, the T&D segment reported revenues of $948.3 million, an increase of $112.5 million, or 13.5 percent, from the first nine months of 2020, primarily due to an increase in revenue on distribution projects and large-sized projects. The C&I segment reported revenues of $904.0 million, an increase of $100.3 million, or 12.5 percent from the first nine months of 2020, primarily due to an increase in revenues on various-sized projects in certain geographic areas. Additionally, revenues during the first nine months of 2020 were negatively impacted by a slight slowdown of work in certain geographic areas related to the COVID-19 pandemic.

    Consolidated gross profit increased to $241.9 million in the first nine months of 2021, an increase of $42.5 million or 21.3 percent, from the first nine months of 2020. The increase in gross profit was due to higher revenues and margins. Gross margin was 13.1 percent for the first nine months of 2021 compared to 12.2 percent for the first nine months of 2020. The increase in gross margin was primarily due to better-than-anticipated productivity on certain projects, favorable job close-outs and a favorable change order on a project. These improvements were partially offset by labor and equipment inefficiencies on certain projects and unfavorable pending change order adjustments on certain projects. Changes in estimates of gross profit on certain projects resulted in a gross margin increase of 0.4 percent and a decrease of 0.4 percent for the first nine months of 2021 and 2020, respectively.

    SG&A increased to $154.6 million in the first nine months of 2021, compared to $137.7 million for the first nine months of 2020. The period-over-period increase was primarily due to higher employee incentive compensation costs, contingent compensation expense related to prior acquisitions and an increase in employee-related expenses to support the growth in our operations.

    Income tax expense was $22.5 million for the first nine months of 2021, with an effective tax rate of 25.9 percent, compared to income tax expense of $15.6 million for the first nine months of 2020, with an effective tax rate of 27.7 percent. The period-over-period decrease in tax rate was primarily due to a favorable impact from stock compensation excess tax benefits and the reduction of the impact of GILTI.

    For the first nine months of 2021, net income was $64.3 million, or $3.75 per diluted share, compared to $40.6 million, or $2.42 per diluted share, for the same period of 2020.

    Backlog
    As of September 30, 2021, MYR's backlog was $1.63 billion, compared to $1.57 billion as of June 30, 2021. As of September 30, 2021, T&D backlog was $652.2 million, and C&I backlog was $981.3 million. Total backlog at September 30, 2021 decreased $90.0 million, or 5.0 percent, from the $1.72 billion reported at September 30, 2020.

    Balance Sheet
    As of September 30, 2021, MYR had $362.7 million of borrowing availability under its $375 million revolving credit facility.

    Non-GAAP Financial Measures
    To supplement MYR’s financial statements presented in accordance with generally accepted accounting principles in the United States (“GAAP”), MYR uses certain non-GAAP measures. Reconciliation to the nearest GAAP measures of all non-GAAP measures included in this press release can be found at the end of this release. MYR’s definitions of these non-GAAP measures may differ from similarly titled measures used by others. These non-GAAP measures should be considered supplemental to, and not a substitute for, financial information prepared in accordance with GAAP.

    MYR believes that these non-GAAP measures are useful because they (i) provide both management and investors meaningful supplemental information regarding financial performance by excluding certain expenses and benefits that may not be indicative of recurring core business operating results, (ii) permit investors to view MYR’s performance using the same tools that management uses to evaluate MYR’s past performance, reportable business segments and prospects for future performance, (iii) publicly disclose results that are relevant to financial covenants included in MYR’s credit facility and (iv) otherwise provide supplemental information that may be useful to investors in evaluating MYR.

    Conference Call
    MYR will host a conference call to discuss its third-quarter 2021 results on Thursday, October 28, 2021 at 8:00 a.m. Mountain time. To participate in the conference call via telephone, please dial (877) 561-2750 (domestic) or (763) 416-8565 (international) and enter conference ID 4249231, at least five minutes prior to the start of the event. A replay of the conference call will be available through Thursday, November 4, 2021, at 11:00 a.m. Mountain time, by dialing (855) 859-2056 or (404) 537-3406 and entering conference ID 4249231. MYR will also broadcast the conference call live via the internet. Interested parties may access the webcast through the Investor Relations section of MYR's website at www.myrgroup.com. Please access the website at least 15 minutes prior to the start of the call to register, download and install any necessary audio software. The webcast will be available until Thursday, November 4, 2021 at 11:00 a.m. Mountain time.

    About MYR
    MYR is a holding company of leading specialty contractors serving the electric utility infrastructure, commercial and industrial construction markets throughout the United States and western Canada who have the experience and expertise to complete electrical installations of any type and size. Their comprehensive services on electric transmission and distribution networks and substation facilities include design, engineering, procurement, construction, upgrade, maintenance and repair services. Transmission and distribution customers include investor-owned utilities, cooperatives, private developers, government-funded utilities, independent power producers, independent transmission companies, industrial facility owners and other contractors. Commercial and industrial electrical contracting services are provided to general contractors, commercial and industrial facility owners, local governments and developers. For more information, visit myrgroup.com.

    Forward-Looking Statements
    Various statements in this announcement, including those that express a belief, expectation, or intention, as well as those that are not statements of historical fact, are forward-looking statements. The forward-looking statements may include projections and estimates concerning the timing and success of specific projects and our future production, revenue, income, capital spending, segment improvements and investments. Forward-looking statements are generally accompanied by words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “likely,” “may,” “objective,” “outlook,” “plan,” “project,” “possible,” “potential,” “should,” “unlikely,” or other words that convey the uncertainty of future events or outcomes. The forward-looking statements in this announcement speak only as of the date of this announcement. We disclaim any obligation to update these statements (unless required by securities laws), and we caution you not to rely on them unduly. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. No forward-looking statement can be guaranteed and actual results may differ materially from those projected. Forward-looking statements in this announcement should be evaluated together with the many uncertainties that affect MYR's business, particularly those mentioned in the risk factors and cautionary statements in Item 1A. of MYR's Annual Report on Form 10-K for the fiscal year ended December 31, 2020, and in any risk factors or cautionary statements contained in MYR's subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K.

    MYR Group Inc. Contact:
    Betty R. Johnson, Chief Financial Officer, 847-290-1891, investorinfo@myrgroup.com

    Investor Contact:
    David Gutierrez, Dresner Corporate Services, 312-780-7204, dgutierrez@dresnerco.com

    Financial tables follow…

    MYR GROUP INC.
    Consolidated Balance Sheets
    As of September 30, 2021 and December 31, 2020

    (in thousands, except share and per share data)September 30,
    2021    		 December 31,
    2020
     (unaudited)  
    ASSETS   
    Current assets:   
    Cash and cash equivalents$73,006   $22,668  
    Accounts receivable, net of allowances of $2,166 and $1,696, respectively362,032   385,938  
    Contract assets, net of allowances of $376 and $359, respectively219,445   185,803  
    Current portion of receivable for insurance claims in excess of deductibles10,639   11,859  
    Refundable income taxes8,934   1,534  
    Other current assets26,579   28,882  
    Total current assets700,635   636,684  
    Property and equipment, net of accumulated depreciation of $313,999 and $294,366, respectively184,863   185,114  
    Operating lease right-of-use assets21,447   22,291  
    Goodwill66,065   66,065  
    Intangible assets, net of accumulated amortization of $16,201 and $14,467, respectively49,632   51,365  
    Receivable for insurance claims in excess of deductibles33,536   27,043  
    Investment in joint ventures3,786   3,040  
    Other assets3,863   4,257  
    Total assets$1,063,827   $995,859  
        
    LIABILITIES AND STOCKHOLDERS' EQUITY   
    Current liabilities:   
    Current portion of long-term debt$1,025   $4,381  
    Current portion of operating lease obligations7,451   6,612  
    Current portion of finance lease obligations—   318  
    Accounts payable193,218   162,580  
    Contract liabilities149,847   158,396  
    Current portion of accrued self-insurance23,945   24,395  
    Other current liabilities80,215   86,718  
    Total current liabilities455,701   443,400  
    Deferred income tax liabilities19,682   18,339  
    Long-term debt3,986   25,039  
    Accrued self-insurance51,449   45,428  
    Operating lease obligations, net of current maturities14,015   15,730  
    Other liabilities22,814   18,631  
    Total liabilities567,647   566,567  
    Commitments and contingencies   
    Stockholders’ equity:   
    Preferred stock—$0.01 par value per share; 4,000,000 authorized shares; none issued and outstanding at September 30, 2021 and December 31, 2020—   —  
    Common stock—$0.01 par value per share; 100,000,000 authorized shares; 16,869,947 and 16,734,239 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively168   167  
    Additional paid-in capital161,593   158,618  
    Accumulated other comprehensive income100   23  
    Retained earnings334,315   270,480  
    Total stockholders' equity attributable to MYR Group Inc.496,176   429,288  
    Noncontrolling interest4   4  
    Total stockholders’ equity496,180   429,292  
    Total liabilities and stockholders’ equity$1,063,827   $995,859  


    MYR GROUP INC.
    Unaudited Consolidated Statements of Operations
    Three and Nine Months Ended September 30, 2021 and 2020

     Three months ended
    September 30,    		 Nine months ended
    September 30,
    (in thousands, except per share data)2021 2020 2021 2020
            
    Contract revenues$610,182  $607,901  $1,852,241  $1,639,422 
    Contract costs526,259  531,429  1,610,343  1,440,013 
    Gross profit83,923  76,472  241,898  199,409 
    Selling, general and administrative expenses53,072  51,443  154,609  137,688 
    Amortization of intangible assets578  578  1,734  3,009 
    Gain on sale of property and equipment(679) (478) (2,473) (1,967)
    Income from operations30,952  24,929  88,028  60,679 
    Other income (expense):       
    Interest income23  —  51  6 
    Interest expense(305) (1,113) (1,458) (3,941)
    Other income (expense), net69  18  190  (556)
    Income before provision for income taxes30,739  23,834  86,811  56,188 
    Income tax expense7,568  6,542  22,493  15,579 
    Net income$23,171  $17,292  $64,318  $40,609 
    Income per common share:       
    —Basic$1.37  $1.04  $3.82  $2.44 
    —Diluted$1.35  $1.02  $3.75  $2.42 
    Weighted average number of common shares and potential common shares outstanding:       
    —Basic16,868  16,698  16,828  16,670 
    —Diluted17,167  16,882  17,132  16,798 


    MYR GROUP INC.
    Unaudited Consolidated Statements of Cash Flows
    Nine Months Ended September 30, 2021 and 2020

     Nine months ended
    September 30,
    (in thousands)2021 2020
        
    Cash flows from operating activities:   
    Net income$64,318   $40,609  
    Adjustments to reconcile net income to net cash flows provided by operating activities:   
    Depreciation and amortization of property and equipment32,884   32,021  
    Amortization of intangible assets1,734   3,009  
    Stock-based compensation expense5,350   3,804  
    Deferred income taxes1,364   712  
    Gain on sale of property and equipment(2,473)  (1,967) 
    Other non-cash items1,171   654  
    Changes in operating assets and liabilities, net of acquisitions:   
    Accounts receivable, net23,929   (12,869) 
    Contract assets, net(33,642)  (4,754) 
    Receivable for insurance claims in excess of deductibles(5,273)  3,103  
    Other assets(5,786)  7,074  
    Accounts payable29,874   7,596  
    Contract liabilities(8,515)  20,161  
    Accrued self insurance5,571   (2,257) 
    Other liabilities(2,291)  31,730  
    Net cash flows provided by operating activities108,215   128,626  
    Cash flows from investing activities:   
    Proceeds from sale of property and equipment2,489   2,147  
    Purchases of property and equipment(32,701)  (27,470) 
    Net cash flows used in investing activities(30,212)  (25,323) 
    Cash flows from financing activities:   
    Net repayments under revolving lines of credit—   (65,189) 
    Payment of principal obligations under equipment notes(24,409)  (30,441) 
    Payment of principal obligations under finance leases(336)  (914) 
    Proceeds from exercise of stock options483   306  
    Repurchase of common shares(3,352)  (426) 
    Other financing activities11   60  
    Net cash flows used in financing activities(27,603)  (96,604) 
    Effect of exchange rate changes on cash(62)  (150) 
    Net increase in cash and cash equivalents50,338   6,549  
    Cash and cash equivalents:   
    Beginning of period22,668   12,397  
    End of period$73,006   $18,946  


    MYR GROUP INC.
    Unaudited Consolidated Selected Data,
    Unaudited Performance Measure and Reconciliation of Non-GAAP Measure
    For the Three and Twelve Months Ended September 30, 2021 and 2020 and
    As of September 30, 2021, December 31, 2020, September 30, 2020 and September 30, 2019

     Three months ended
    September 30,    		 Last twelve months ended
    September 30,    		 
    (dollars in thousands, except share and per share data)2021 2020 2021 2020 
             
    Summary Statement of Operations Data:        
    Contract revenues$610,182  $607,901  $2,460,211 $2,210,497 
    Gross profit$83,923  $76,472  $318,342 $268,331 
    Income from operations$30,952  $24,929  $113,894 $81,559 
    Income before provision for income taxes$30,739  $23,834  $112,008 $74,424 
    Income tax expense$7,568  $6,542  $29,540 $21,040 
    Net income$23,171  $17,292  $82,468 $53,384 
    Tax rate24.6% 27.4% 26.4
    		%28.3
    		%
             
    Per Share Data:        
    Income per common share:        
    - Basic$1.37  $1.04  $4.91 (1)$3.21 (1)
    - Diluted$1.35  $1.02  $4.83 (1)$3.17 (1)
    Weighted average number of common shares and potential common shares outstanding:        
    - Basic16,868  16,698  16,802 (2)16,657 (2)
    - Diluted17,167  16,882  17,089 (2)16,784 (2)


    (in thousands)September 30,
    2021    		 December 31,
    2020    		 September 30,
    2020    		 September 30,
    2019
            
    Summary Balance Sheet Data:       
    Total assets$1,063,827  $995,859  $1,018,911  $988,013 
    Total stockholders’ equity attributable to MYR Group Inc.$496,176  $429,288  $408,600  $350,568 
    Goodwill and intangible assets$115,697  $117,430  $117,973  $121,950 
    Total funded debt (3)$5,011  $29,420  $70,194  $178,190 


    (in thousands)Last twelve months ended
    September 30,
     2021 2020
    Financial Performance Measure (4):   
    Reconciliation of Non-GAAP measure:   
    Net income$82,468  $53,384 
    Interest expense, net2,026  5,658 
    Tax impact of interest(535) (1,601)
    EBI, net of taxes (5)$83,959  $57,441 

    See notes at the end of this earnings release


    MYR GROUP INC.
    Unaudited Performance Measures and Reconciliation of Non-GAAP Measures
    Three and Twelve Months Ended September 30, 2021 and 2020

     Three months ended
    September 30,    		 Last twelve months ended
    September 30,
    (in thousands, except share, per share data, ratios and percentages)2021 2020 2021 2020
            
    Financial Performance Measures (4):       
    EBITDA (6)$42,311  $36,222  $160,075   $126,587  
    EBITDA per Diluted Share (7)$2.46  $2.15  $9.37   $7.54  
    Free Cash Flow (8)$7,949  $20,171  $105,170   $115,836  
    Book Value per Period End Share (9)$28.90  $24.17     
    Tangible Book Value (10)$380,479  $290,627     
    Tangible Book Value per Period End Share (11)$22.16  $17.19     
    Funded Debt to Equity Ratio (12)0.01  0.17     
    Asset Turnover (13)    2.41   2.24  
    Return on Assets (14)    8.1 % 5.4 %
    Return on Equity (15)    20.2 % 15.2 %
    Return on Invested Capital (18)    18.3 % 11.1 %
            
    Reconciliation of Non-GAAP Measures:       
    Reconciliation of Net Income to EBITDA:       
    Net income23,171  17,292  82,468   53,384  
    Interest expense, net282  1,113  2,026   5,658  
    Income tax expense7,568  6,542  29,540   21,040  
    Depreciation and amortization11,290  11,275  46,041   46,505  
    EBITDA (6)$42,311  $36,222  $160,075   $126,587  
            
    Reconciliation of Net Income per Diluted Share to EBITDA per Diluted Share:       
    Net income per share1.35  1.02  4.83   3.17  
    Interest expense, net, per share0.02  0.07  0.12   0.34  
    Income tax expense per share0.44  0.39  1.73   1.25  
    Depreciation and amortization per share0.65  0.67  2.69   2.78  
    EBITDA per Diluted Share (7)$2.46  $2.15  $9.37   $7.54  
            
    Calculation of Free Cash Flow:       
    Net cash flow from operating activities$19,653  $30,703  $154,756   $161,780  
    Less: cash used in purchasing property and equipment(11,704) (10,532) (49,586)  (45,944) 
    Free Cash Flow (8)$7,949  $20,171  $105,170   $115,836  
            

    See notes at the end of this earnings release.


    MYR GROUP INC.
    Unaudited Performance Measures and Reconciliation of Non-GAAP Measures
    As of September 30, 2021, 2020 and 2019

    (in thousands)September 30,
    2021    		 September 30,
    2020
        
    Reconciliation of Book Value to Tangible Book Value:   
    Book value (total stockholders' equity attributable to MYR Group Inc.)$496,176  $408,600 
    Goodwill and intangible assets(115,697) (117,973)
    Tangible Book Value (10)$380,479  $290,627 
        
    Reconciliation of Book Value per Period End Share to Tangible Book Value per Period End Share:   
    Book value per period end share$28.90  $24.17 
    Goodwill and intangible assets per period end share(6.74) (6.98)
    Tangible Book Value per Period End Share (11)$22.16  $17.19 
        
    Calculation of Period End Shares:   
    Shares outstanding16,870  16,719 
    Plus: common equivalents299  184 
    Period End Shares (16)17,169  16,903 


    (in thousands)September 30,
    2021    		 September 30,
    2020    		 September 30,
    2019
          
    Reconciliation of Invested Capital to Stockholders Equity:     
    Book value (total stockholders' equity attributable to MYR Group Inc.)$496,176  $408,600  $350,568 
    Plus: total funded debt5,011  70,194  178,190 
    Less: cash and cash equivalents(73,006) (18,946) (9,145)
    Invested Capital (17)$428,181  $459,848  $519,613 

    See notes at the end of this earnings release.

    (1)Last-twelve-months earnings per share is the sum of earnings per share reported in the last four quarters.
    (2)Last-twelve-months weighted average basic and diluted shares were determined by adding the weighted average shares reported for the last four quarters and dividing by four.
    (3)Funded debt includes outstanding borrowings under our revolving credit facility and our outstanding equipment notes.
    (4)These financial performance measures are provided as supplemental information to the financial statements. These measures are used by management to evaluate our past performance, our prospects for future performance and our ability to comply with certain material covenants as defined within our credit agreement, and to compare our results with those of our peers. In addition, we believe that certain of the measures, such as book value, tangible book value, free cash flow, asset turnover, return on equity, and debt leverage are measures that are monitored by sureties, lenders, lessors, suppliers and certain investors. Our calculation of each measure is described in the following notes; our calculation may not be the same as the calculations made by other companies.
    (5)EBI, net of taxes is defined as net income plus net interest, less the tax impact of net interest. The tax impact of net interest is computed by multiplying net interest by the effective tax rate. Management uses EBI, net of taxes, to measure our results exclusive of the impact of financing costs.
    (6)EBITDA is defined as earnings before interest, taxes, depreciation and amortization.  EBITDA is not recognized under GAAP and does not purport to be an alternative to net income as a measure of operating performance or to net cash flows provided by operating activities as a measure of liquidity. Certain material covenants contained within our credit agreement are based on EBITDA with certain additional adjustments, including our interest coverage ratio and leverage ratio, which we must comply with to avoid potential immediate repayment of amounts borrowed or additional fees to seek relief from our lenders. In addition, management considers EBITDA a useful measure because it provides MYR Group Inc. and its investors with an additional tool to compare our operating performance on a consistent basis by removing the impact of certain items that management believes to not directly reflect the company’s core operations.  Management further believes that EBITDA is useful to investors and other external users of our financial statements in evaluating the company’s operating performance and cash flow because EBITDA is widely used by investors to measure a company’s operating performance without regard to items such as interest expense, taxes, depreciation and amortization, which can vary substantially from company to company depending upon accounting methods and book value of assets, useful lives placed on assets, capital structure and the method by which assets were acquired.
    (7)EBITDA per diluted share is calculated by dividing EBITDA by the weighted average number of diluted shares outstanding for the period. EBITDA per diluted share is not recognized under GAAP and does not purport to be an alternative to income per diluted share.
    (8)Free cash flow, which is defined as cash flow provided by operating activities minus cash flow used in purchasing property and equipment, is not recognized under GAAP and does not purport to be an alternative to net income, cash flow from operations or the change in cash on the balance sheet. Management views free cash flow as a measure of operational performance, liquidity and financial health.
    (9)Book value per period end share is calculated by dividing total stockholders’ equity at the end of the period by the period end shares outstanding.
    (10)Tangible book value is calculated by subtracting goodwill and intangible assets outstanding at the end of the period from stockholders’ equity. Tangible book value is not recognized under GAAP and does not purport to be an alternative to book value or stockholders’ equity.
    (11)Tangible book value per period end share is calculated by dividing tangible book value at the end of the period by the period end number of shares outstanding. Tangible book value per period end share is not recognized under GAAP and does not purport to be an alternative to income per diluted share.
    (12)The funded debt to equity ratio is calculated by dividing total funded debt at the end of the period by total stockholders’ equity at the end of the period.
    (13)Asset turnover is calculated by dividing the current period revenue by total assets at the beginning of the period.
    (14)Return on assets is calculated by dividing net income for the period by total assets at the beginning of the period.
    (15)Return on equity is calculated by dividing net income for the period by total stockholders’ equity at the beginning of the period.
    (16)Period end shares is calculated by adding average common stock equivalents for the quarter to the period end balance of common stock outstanding. Period end shares is not recognized under GAAP and does not purport to be an alternative to diluted shares. Management views period end shares as a better measure of shares outstanding as of the end of the period.
    (17)Invested capital is calculated by adding net funded debt (total funded debt less cash and marketable securities) to total stockholders’ equity.
    (18)Return on invested capital is calculated by dividing EBI, net of taxes, less any dividends, by invested capital at the beginning of the period. Return on invested capital is not recognized under GAAP, and is a key metric used by management to determine our executive compensation.

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