STRL Sterling Infrastructure Inc

Strong Profitability and Cash Flow Further Enhance Liquidity Position

Record Backlog Provides Visibility Into 2021 Growth

Sterling Construction Company, Inc. (NasdaqGS: STRL) (“Sterling” or “the Company”) today announced financial results for the third quarter 2020.

Consolidated Third Quarter 2020 Financial Results Compared to Third Quarter 2019:

• Revenues were $383.5 million compared to $291.7 million;
• Gross margin was 13.0% of revenues compared to 10.0%;
• Net Income was $15.2 million compared to $8.0 million;
• EPS was $0.54 compared to $0.30; and,
• EBITDA was $36.7 million compared to $15.4 million.

Consolidated Financial Position and Liquidity:

• Cash and Cash Equivalents were $72.6 million at September 30, 2020 compared to $45.7 million at December 31, 2019;
• Cash flows from operations were $90.9 million for the nine months ended September 30, 2020 compared to $8.5 million for the comparable prior year period;
• Payments of debt totaled $52.7 million for the nine months ended September 30, 2020;
• Debt totaled $392.7 million (or $320.1 million, net of cash) at September 30, 2020 compared to $433.1 million (or $387.4 million, net of cash) at December 31, 2019; and,
• Zero drawn and full availability on the $75.0 million Revolving Credit Facility.

Heavy Civil and Specialty Services Backlog Highlights:

• Backlog at September 30, 2020 was a record $1.24 billion, up from $1.07 billion at December 31, 2019.
• Combined Backlog at September 30, 2020 was $1.51 billion, up from $1.34 billion at December 31, 2019. Combined Backlog includes the aforementioned Backlog and Unsigned Low-bid Awards of $270 million and $273 million at September 30, 2020 and December 31, 2019, respectively.
• Gross margin in Backlog increased approximately 90 basis points, from 11.5% at December 31, 2019 to 12.4% at September 30, 2020. Gross margin in Combined Backlog has increased approximately 60 basis points, from 11.0% at December 31, 2019 to 11.6% at September 30, 2020.

Maintains Full Year Revenue and Income Guidance:

• Revenue: $1.415 billion to $1.430 billion.
• Net Income: $41 million to $44 million, excluding acquisition related costs of $1 million to $2 million.
• Expected dilutive average shares outstanding: 28.1 million.

   

CEO Remarks and Outlook

“We had another great quarter, nearly doubling our net income year-over-year and further enhancing our financial position through strong free cash flow generation,” stated Joe Cutillo, Sterling’s Chief Executive Officer. “The third quarter was yet another example of the effectiveness of our strategic focus on diversifying into higher margin, higher value add, lower risk work in terms of producing growth in bottom line results. I’d like to thank all of our nearly 3,000 employees for their hard work and dedication to the company throughout this unusual year. Their commitment to our shared vision has enabled us to achieve record results for the first nine months of the year, while at the same time upholding our COVID-19 protocols in order to keep our team safe and healthy.”

“Our Specialty Services segment, which is comprised primarily of our Plateau operations, once again delivered an outstanding bottom line performance reflecting its team’s consistent and highly effective project execution. Plateau continues to enjoy strong backlog given the market demand for their highly specialized capabilities for large distribution and data centers and warehousing customers. Our Residential segment capitalized on the recovery in the Texas home building market and continued its healthy growth, delivering year-over-year improvement in revenues and operating profit. The expansion of our Residential segment into the Houston market is progressing as scheduled and this large metropolitan area is well on its way to becoming a meaningful percentage of our overall slab count. Our Heavy Civil segment results were off modestly from last year’s third quarter due largely to a charge for increased estimated cost to complete the construction of three separate bridges in Texas and a shift in mix in the quarter. We expect to see an improved mix of revenues in the coming quarters as we ramp up on several of the attractive design-build and non-heavy highway projects we’ve booked in recent months,” continued Mr. Cutillo.

“We are very pleased with our liquidity position and cash generation. As of September 30, 2020, we have generated over $90 million of cash flow from operations and have reduced our total debt by $40.4 million (or $67.3 million, net of cash), while investing $20.5 million of capital expenditures, net of proceeds. We remain comfortable with our capital structure and believe that we have more than adequate financial flexibility to pursue new opportunities and continue our profitable growth. We expect to have a further reduction of debt over the balance of 2020, which will allow us to enter 2021 from a position of further improved financial strength,” added Mr. Cutillo.

Mr. Cutillo concluded, “Looking ahead, despite the pandemic-related uncertainty persisting in the U.S. economy, we are maintaining our full year 2020 guidance for revenues of between $1.415 billion and $1.430 billion and 2020 net income attributable to Sterling common stockholders of between $41 million and $44 million, excluding acquisition related costs of $1 million to $2 million, compared to $24.5 million of Adjusted Net Income in 2019. We expect our full year 2020 diluted average common shares outstanding to be approximately 28.1 million.”

Conference Call

Sterling’s management will hold a conference call to discuss these results and recent corporate developments on Tuesday, November 3, 2020 at 9:00 a.m. ET/8:00 a.m. CT. Interested parties may participate in the call by dialing (201) 493-6744 or (877) 445-9755. Please call in ten minutes before the conference call is scheduled to begin and ask for the Sterling Construction call. To coincide with the conference call, Sterling will post a slide presentation at www.strlco.com on the Investor Presentations & Webcast section of the Investor Relations tab. Following management’s opening remarks, there will be a question and answer session.

To listen to a simultaneous webcast of the call, please go to the Company’s website at www.strlco.com at least fifteen minutes early to download and install any necessary audio software. If you are unable to listen live, the conference call webcast will be archived on the Company’s website for thirty days.

About Sterling

Sterling Construction Company, Inc., (“Sterling” or “the Company”), a Delaware corporation, is a construction company that has been involved in the construction industry since its founding in 1955. The Company operates through a variety of subsidiaries within three segments specializing in Heavy Civil, Specialty Services and Residential projects in the United States (the “U.S.”), primarily across the southern U.S., the Rocky Mountain States, California and Hawaii, as well as other areas with strategic construction opportunities. Heavy Civil includes infrastructure and rehabilitation projects for highways, roads, bridges, airfields, ports, light rail, water, wastewater and storm drainage systems. Specialty Services projects include construction site excavation and drainage, drilling and blasting for excavation, foundations for multi-family homes, parking structures and other commercial concrete projects. Residential projects include concrete foundations for single-family homes.

Important Information for Investors and Stockholders

Non-GAAP Measures

This press release contains “Non-GAAP” financial measures as defined under Regulation G of the amended U.S. Securities Exchange Act of 1934. The Company reports financial results in accordance with U.S. generally accepted accounting principles (“GAAP”), but the Company believes that certain Non-GAAP financial measures provide useful supplemental information to investors regarding the underlying business trends and performance of the Company’s ongoing operations and are useful for period-over-period comparisons of those operations.

Non-GAAP measures include adjusted net income, adjusted EPS, and adjusted EBITDA, in each case excluding the impacts of certain identified items. The excluded items represent items that the Company does not consider to be representative of its normal operations. The Company believes that these measures are useful for investors to review, because they provide a consistent measure of the underlying financial results of the Company’s ongoing business and, in the Company’s view, allow for a supplemental comparison against historical results and expectations for future performance. Furthermore, the Company uses each of these to measure the performance of the Company’s operations for budgeting, forecasting, as well as employee incentive compensation. However, Non-GAAP measures should not be considered as substitutes for net income, EPS, or other data prepared and reported in accordance with GAAP and should be viewed in addition to the Company’s reported results prepared in accordance with GAAP.

Reconciliations of these Non-GAAP financial measures to the most comparable GAAP measures are provided in the tables included in this press release.

Cautionary Statement Regarding Forward-Looking Statements

This press release contains statements that are considered forward-looking statements within the meaning of the federal securities laws. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control, which may include statements about: the duration of the COVID-19 pandemic and its ongoing or further negative impact on global economic conditions; our business strategy; our financial strategy; and our plans, objectives, expectations, forecasts, outlook and intentions. All of these types of statements, other than statements of historical fact included in this press release, are forward-looking statements. In some cases, forward-looking statements can be identified by terminology such as “may,” “will,” “could,” “should,” “expect,” “plan,” “project,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “pursue,” “target,” “continue,” the negative of such terms or other comparable terminology. The forward-looking statements contained in this press release are largely based on our expectations, which reflect estimates and assumptions made by our management. These estimates and assumptions reflect our best judgment based on currently known market conditions and other factors. Although we believe such estimates and assumptions to be reasonable, they are inherently uncertain and involve a number of risks and uncertainties that are beyond our control. In addition, management’s assumptions about future events may prove to be inaccurate. Management cautions all readers that the forward-looking statements contained in this press release are not guarantees of future performance, and we cannot assure any reader that such statements will be realized or the forward-looking events and circumstances will occur. Actual results may differ materially from those anticipated or implied in the forward-looking statements due to factors listed in the “Risk Factors” section in our filings with the U.S. Securities and Exchange Commission (“SEC”) and elsewhere in those filings. The forward-looking statements speak only as of the date made, and other than as required by law, we do not intend to publicly update or revise any forward-looking statements as a result of new information, future events or otherwise. These cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf.

STERLING CONSTRUCTION COMPANY, INC. & SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited)

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2020

 

2019

 

2020

 

2019

Revenues

$

383,458

 

 

$

291,699

 

 

$

1,080,184

 

 

$

779,734

 

Cost of revenues

(333,542)

 

 

(262,483)

 

 

(935,424)

 

 

(705,519)

 

Gross profit

49,916

 

 

29,216

 

 

144,760

 

 

74,215

 

General and administrative expense

(15,154)

 

 

(10,239)

 

 

(51,209)

 

 

(32,302)

 

Intangible asset amortization

(2,866)

 

 

(600)

 

 

(8,569)

 

 

(1,800)

 

Acquisition related costs

(401)

 

 

(1,896)

 

 

(1,013)

 

 

(2,158)

 

Other operating expense, net

(2,664)

 

 

(4,366)

 

 

(9,989)

 

 

(9,936)

 

Operating income

28,831

 

 

12,115

 

 

73,980

 

 

28,019

 

Interest income

23

 

 

331

 

 

146

 

 

986

 

Interest expense

(7,177)

 

 

(3,024)

 

 

(22,537)

 

 

(8,988)

 

Income before income taxes

21,677

 

 

9,422

 

 

51,589

 

 

20,017

 

Income tax expense

(6,280)

 

 

(913)

 

 

(14,712)

 

 

(1,782)

 

Net income

15,397

 

 

8,509

 

 

36,877

 

 

18,235

 

Less: Net income attributable to noncontrolling interests

(240)

 

 

(552)

 

 

(395)

 

 

(635)

 

Net income attributable to Sterling common stockholders

$

15,157

 

 

$

7,957

 

 

$

36,482

 

 

$

17,600

 

 

 

 

 

 

 

 

 

Net income per share attributable to Sterling common stockholders:

 

 

 

 

 

 

 

Basic

$

0.54

 

 

$

0.30

 

 

$

1.31

 

 

$

0.67

 

Diluted

$

0.54

 

 

$

0.30

 

 

$

1.30

 

 

$

0.66

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

Basic

28,003

 

 

26,365

 

 

27,832

 

 

26,359

 

Diluted

28,233

 

 

26,637

 

 

27,986

 

 

26,661

 

STERLING CONSTRUCTION COMPANY, INC. & SUBSIDIARIES SEGMENT INFORMATION (In thousands) (Unaudited)

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2020

 

% of Revenue

 

2019

 

% of Revenue

 

2020

 

% of Revenue

 

2019

 

% of Revenue

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Heavy Civil

$

201,078

 

 

52%

 

$

218,894

 

 

75%

 

$

577,141

 

 

54%

 

$

569,635

 

 

73%

Specialty Services

139,971

 

 

37%

 

32,863

 

 

11%

 

380,397

 

 

35%

 

91,436

 

 

12%

Residential

42,409

 

 

11%

 

39,942

 

 

14%

 

122,646

 

 

11%

 

118,663

 

 

15%

Total Revenue

$

383,458

 

 

 

 

$

291,699

 

 

 

 

$

1,080,184

 

 

 

 

$

779,734

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Heavy Civil

$

2,405

 

 

1.2%

 

$

7,420

 

 

3.4%

 

$

2,679

 

 

0.5%

 

$

11,020

 

 

1.9%

Specialty Services

21,474

 

 

15.3%

 

1,371

 

 

4.2%

 

55,834

 

 

14.7%

 

3,284

 

 

3.6%

Residential

5,353

 

 

12.6%

 

5,220

 

 

13.1%

 

16,480

 

 

13.4%

 

15,873

 

 

13.4%

Subtotal

29,232

 

 

7.6%

 

14,011

 

 

4.8%

 

74,993

 

 

6.9%

 

30,177

 

 

3.9%

Acquisition related costs

(401)

 

 

 

 

(1,896)

 

 

 

 

(1,013)

 

 

 

 

(2,158)

 

 

 

Total Operating Income

$

28,831

 

 

7.5%

 

$

12,115

 

 

4.2%

 

$

73,980

 

 

6.8%

 

$

28,019

 

 

3.6%

STERLING CONSTRUCTION COMPANY, INC. & SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except per share data) (Unaudited)

 

 

September 30, 2020

 

December 31, 2019

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

72,593

 

 

$

45,733

 

Accounts receivable, including retainage

271,342

 

 

248,247

 

Costs and estimated earnings in excess of billings

55,310

 

 

42,555

 

Receivables from and equity in construction joint ventures

13,802

 

 

9,196

 

Other current assets

14,171

 

 

11,790

 

Total current assets

427,218

 

 

357,521

 

Property and equipment, net

121,534

 

 

116,030

 

Operating lease right-of-use assets

17,250

 

 

13,979

 

Goodwill

192,014

 

 

191,892

 

Other intangibles, net

247,754

 

 

256,323

 

Deferred tax asset, net

16,589

 

 

26,012

 

Other non-current assets, net

153

 

 

183

 

Total assets

$

1,022,512

 

 

$

961,940

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

127,336

 

 

$

137,593

 

Billings in excess of costs and estimated earnings

126,986

 

 

85,011

 

Current maturities of long-term debt

57,476

 

 

42,473

 

Current portion of long-term lease obligations

7,624

 

 

7,095

 

Income taxes payable

2,251

 

 

1,212

 

Accrued compensation

24,328

 

 

13,727

 

Other current liabilities

11,368

 

 

6,393

 

Total current liabilities

357,369

 

 

293,504

 

Long-term debt

335,237

 

 

390,627

 

Long-term lease obligations

9,668

 

 

6,976

 

Members’ interest subject to mandatory redemption and undistributed earnings

50,798

 

 

49,003

 

Other long-term liabilities

10,124

 

 

619

 

Total liabilities

763,196

 

 

740,729

 

Stockholders’ equity:

 

 

 

Common stock

283

 

 

283

 

Additional paid in capital

254,860

 

 

251,019

 

Treasury Stock, at cost

(2,651)

 

 

(6,142)

 

Retained earnings (deficit)

11,449

 

 

(25,033)

 

Accumulated other comprehensive loss

(6,313)

 

 

(209)

 

Total Sterling stockholders’ equity

257,628

 

 

219,918

 

Noncontrolling interests

1,688

 

 

1,293

 

Total stockholders’ equity

259,316

 

 

221,211

 

Total liabilities and stockholders’ equity

$

1,022,512

 

 

$

961,940

 

 

STERLING CONSTRUCTION COMPANY, INC. & SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)

 

 

Nine Months Ended September 30,

 

2020

 

2019

Cash flows from operating activities:

 

 

 

Net income

$

36,877

 

 

$

18,235

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

Depreciation and amortization

24,639

 

 

12,288

 

Amortization of debt issuance costs and non-cash interest

2,489

 

 

2,375

 

Gain on disposal of property and equipment

(1,042)

 

 

(466)

 

Deferred taxes

10,946

 

 

1,561

 

Stock-based compensation expense

7,961

 

 

2,489

 

Change in interest rate hedge

251

 

 

—

 

Changes in operating assets and liabilities

8,828

 

 

(28,005)

 

Net cash provided by operating activities

90,949

 

 

8,477

 

Cash flows from investing activities:

 

 

 

Capital expenditures

(22,088)

 

 

(7,871)

 

Proceeds from sale of property and equipment

1,557

 

 

1,265

 

Net cash used in investing activities

(20,531)

 

 

(6,606)

 

Cash flows from financing activities:

 

 

 

Repayments of debt

(52,695)

 

 

(10,435)

 

Distributions to noncontrolling interest owners

—

 

 

(5,900)

 

Purchase of treasury stock

—

 

 

(3,201)

 

Other borrowings

9,137

 

 

100

 

Net cash used in financing activities

(43,558)

 

 

(19,436)

 

Net change in cash and cash equivalents

26,860

 

 

(17,565)

 

Cash and cash equivalents at beginning of period

45,733

 

 

94,095

 

Cash and cash equivalents at end of period

$

72,593

 

 

$

76,530

 

STERLING CONSTRUCTION COMPANY, INC. & SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Reconciliation of Non-GAAP Supplemental Adjusted Financial Data (1) (In thousands, except per share data) (Unaudited)

The Company reports its financial results in accordance with GAAP. This press release also includes several Non-GAAP financial measures as defined under the SEC’s Regulation G. The following tables reconcile certain Non-GAAP financial measures used in this press release to comparable GAAP financial measures.

 

 

 

 

 

 

 

Three Months Ended September 30, 2020

 

As Reported (GAAP)

 

Adjustment

 

Adjusted (Non-GAAP)

Revenues

$

383,458

 

 

$

—

 

 

$

383,458

 

Cost of revenues

(333,542)

 

 

—

 

 

(333,542)

 

Gross profit

49,916

 

 

—

 

 

49,916

 

General and administrative expense

(15,154)

 

 

—

 

 

(15,154)

 

Intangible asset amortization

(2,866)

 

 

—

 

 

(2,866)

 

Acquisition related costs

(401)

 

 

401

 

 

—

 

Other operating expense, net

(2,664)

 

 

—

 

 

(2,664)

 

Operating income

28,831

 

 

401

 

 

29,232

 

Interest income

23

 

 

—

 

 

23

 

Interest expense

(7,177)

 

 

—

 

 

(7,177)

 

Income before income taxes

21,677

 

 

401

 

 

22,078

 

Income tax expense (2)

(6,280)

 

 

(116)

 

 

(6,396)

 

Net income

15,397

 

 

285

 

 

15,682

 

Less: Net income attributable to noncontrolling interests

(240)

 

 

—

 

 

(240)

 

Net income attributable to Sterling common stockholders

$

15,157

 

 

$

285

 

 

$

15,442

 

 

 

 

 

 

 

Net income per share attributable to Sterling common stockholders:

 

 

 

 

 

Basic

$

0.54

 

 

$

0.01

 

 

$

0.55

 

Diluted

$

0.54

 

 

$

0.01

 

 

$

0.55

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

Basic

28,003

 

 

 

 

28,003

 

Diluted

28,233

 

 

 

 

28,233

 

 

 

 

 

 

 

(1) The summary unaudited adjusted financial data is presented excluding the costs of acquiring Plateau, net of tax. This presentation is considered a non-GAAP financial measure, which the Company believes provides a better indication of our operating results prior to the excluded items.

(2) Adjusted Non-GAAP income tax expense of $6,396 includes non-cash federal income tax expense of $4,839.

STERLING CONSTRUCTION COMPANY, INC. & SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Reconciliation of Non-GAAP Supplemental Adjusted Financial Data (1) (In thousands, except per share data) (Unaudited)

The Company reports its financial results in accordance with GAAP. This press release also includes several Non-GAAP financial measures as defined under the SEC’s Regulation G. The following tables reconcile certain Non-GAAP financial measures used in this press release to comparable GAAP financial measures.

 

 

 

 

 

 

 

Three Months Ended September 30, 2019

 

As Reported GAAP)

 

Adjustment

 

Adjusted (Non-GAAP)

Revenues

$

291,699

 

 

$

—

 

 

$

291,699

 

Cost of revenues

(262,483)

 

 

—

 

 

(262,483)

 

Gross profit

29,216

 

 

—

 

 

29,216

 

General and administrative expense

(10,239)

 

 

—

 

 

(10,239)

 

Intangible asset amortization

(600)

 

 

—

 

 

(600)

 

Acquisition related costs

(1,896)

 

 

1,896

 

 

—

 

Other operating expense, net

(4,366)

 

 

—

 

 

(4,366)

 

Operating income

12,115

 

 

1,896

 

 

14,011

 

Interest income

331

 

 

—

 

 

331

 

Interest expense

(3,024)

 

 

—

 

 

(3,024)

 

Income before income taxes

9,422

 

 

1,896

 

 

11,318

 

Income tax expense (2)

(913)

 

 

(184)

 

 

(1,097)

 

Net income

8,509

 

 

1,712

 

 

10,221

 

Less: Net income attributable to noncontrolling interests

(552)

 

 

—

 

 

(552)

 

Net income attributable to Sterling common stockholders

$

7,957

 

 

$

1,712

 

 

$

9,669

 

 

 

 

 

 

 

Net income per share attributable to Sterling common stockholders:

 

 

 

 

 

Basic

$

0.30

 

 

$

0.07

 

 

$

0.37

 

Diluted

$

0.30

 

 

$

0.06

 

 

$

0.36

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

Basic

26,365

 

 

 

 

26,365

 

Diluted

26,637

 

 

 

 

26,637

 

 

 

 

 

 

 

(1) The summary unaudited adjusted financial data is presented excluding the costs of acquiring Plateau, net of tax. This presentation is considered a non-GAAP financial measure, which the Company believes provides a better indication of our operating results prior to the excluded items.

(2) Adjusted Non-GAAP income tax expense of $1,097 includes non-cash federal income tax expense of $984.

STERLING CONSTRUCTION COMPANY, INC. & SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Reconciliation of Non-GAAP Supplemental Adjusted Financial Data (1) (In thousands, except per share data) (Unaudited)

The Company reports its financial results in accordance with GAAP. This press release also includes several Non-GAAP financial measures as defined under the SEC’s Regulation G. The following tables reconcile certain Non-GAAP financial measures used in this press release to comparable GAAP financial measures.

 

 

 

 

 

 

 

Nine Months Ended September 30, 2020

 

As Reported (GAAP)

 

Adjustment

 

Adjusted (Non-GAAP)

Revenues

$

1,080,184

 

 

$

—

 

 

$

1,080,184

 

Cost of revenues

(935,424)

 

 

—

 

 

(935,424)

 

Gross profit

144,760

 

 

—

 

 

144,760

 

General and administrative expense

(51,209)

 

 

—

 

 

(51,209)

 

Intangible asset amortization

(8,569)

 

 

—

 

 

(8,569)

 

Acquisition related costs

(1,013)

 

 

1,013

 

 

—

 

Other operating expense, net

(9,989)

 

 

—

 

 

(9,989)

 

Operating income

73,980

 

 

1,013

 

 

74,993

 

Interest income

146

 

 

—

 

 

146

 

Interest expense

(22,537)

 

 

—

 

 

(22,537)

 

Income before income taxes

51,589

 

 

1,013

 

 

52,602

 

Income tax expense (2)

(14,712)

 

 

(289)

 

 

(15,001)

 

Net income

36,877

 

 

724

 

 

37,601

 

Less: Net income attributable to noncontrolling interests

(395)

 

 

—

 

 

(395)

 

Net income attributable to Sterling common stockholders

$

36,482

 

 

$

724

 

 

$

37,206

 

 

 

 

 

 

 

Net income per share attributable to Sterling common stockholders:

 

 

 

 

 

Basic

$

1.31

 

 

$

0.03

 

 

$

1.34

 

Diluted

$

1.30

 

 

$

0.03

 

 

$

1.33

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

Basic

27,832

 

 

 

 

27,832

 

Diluted

27,986

 

 

 

 

27,986

 

 

 

 

 

 

 

(1) The summary unaudited adjusted financial data is presented excluding the costs of acquiring Plateau, net of tax. This presentation is considered a non-GAAP financial measure, which the Company believes provides a better indication of our operating results prior to the excluded items.

(2) Adjusted Non-GAAP income tax expense of $15,001 includes non-cash federal income tax expense of $11,235.

STERLING CONSTRUCTION COMPANY, INC. & SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Reconciliation of Non-GAAP Supplemental Adjusted Financial Data (1) (In thousands, except per share data) (Unaudited)

The Company reports its financial results in accordance with GAAP. This press release also includes several Non-GAAP financial measures as defined under the SEC’s Regulation G. The following tables reconcile certain Non-GAAP financial measures used in this press release to comparable GAAP financial measures.

 

 

 

 

 

 

 

Nine Months Ended September 30, 2019

 

As Reported (GAAP)

 

Adjustment

 

Adjusted (Non-GAAP)

Revenues

$

779,734

 

 

$

—

 

 

$

779,734

 

Cost of revenues

(705,519)

 

 

—

 

 

(705,519)

 

Gross profit

74,215

 

 

—

 

 

74,215

 

General and administrative expense

(32,302)

 

 

—

 

 

(32,302)

 

Intangible asset amortization

(1,800)

 

 

—

 

 

(1,800)

 

Acquisition related costs

(2,158)

 

 

2,158

 

 

—

 

Other operating expense, net

(9,936)

 

 

—

 

 

(9,936)

 

Operating income

28,019

 

 

2,158

 

 

30,177

 

Interest income

986

 

 

—

 

 

986

 

Interest expense

(8,988)

 

 

—

 

 

(8,988)

 

Income before income taxes

20,017

 

 

2,158

 

 

22,175

 

Income tax expense (2)

(1,782)

 

 

(192)

 

 

(1,974)

 

Net income

18,235

 

 

1,966

 

 

20,201

 

Less: Net income attributable to noncontrolling interests

(635)

 

 

—

 

 

(635)

 

Net income attributable to Sterling common stockholders

$

17,600

 

 

$

1,966

 

 

$

19,566

 

 

 

 

 

 

 

Net income per share attributable to Sterling common stockholders:

 

 

 

 

 

Basic

$

0.67

 

 

$

0.07

 

 

$

0.74

 

Diluted

$

0.66

 

 

$

0.07

 

 

$

0.73

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

Basic

26,359

 

 

 

 

26,359

 

Diluted

26,661

 

 

 

 

26,661

 

 

 

 

 

 

 

(1) The summary unaudited adjusted financial data is presented excluding the costs of acquiring Plateau, net of tax. This presentation is considered a non-GAAP financial measure, which the Company believes provides a better indication of our operating results prior to the excluded items.

(2) Adjusted Non-GAAP income tax expense of $1,974 includes non-cash federal income tax expense of $1,753.

STERLING CONSTRUCTION COMPANY, INC. & SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Reconciliation of Non-GAAP Supplemental Adjusted Financial Data (1) (In thousands, except per share data) (Unaudited)

The Company reports its financial results in accordance with GAAP. This press release also includes several Non-GAAP financial measures as defined under the SEC’s Regulation G. The following tables reconcile certain Non-GAAP financial measures used in this press release to comparable GAAP financial measures.

 

 

 

 

 

 

 

Year Ended December 31, 2019

 

As Reported (GAAP) (2)

 

Adjustment

 

Adjusted (Non-GAAP)

Revenues

$

1,126,278

 

 

$

—

 

 

$

1,126,278

 

Cost of revenues

(1,018,484)

 

 

—

 

 

(1,018,484)

 

Gross profit

107,794

 

 

—

 

 

107,794

 

General and administrative expense

(49,200)

 

 

—

 

 

(49,200)

 

Intangible asset amortization

(4,695)

 

 

 

 

(4,695)

 

Acquisition related costs

(4,311)

 

 

4,311

 

 

—

 

Other operating expense, net

(11,837)

 

 

—

 

 

(11,837)

 

Operating income

37,751

 

 

4,311

 

 

42,062

 

Interest income

1,142

 

 

—

 

 

1,142

 

Interest expense

(16,686)

 

 

—

 

 

(16,686)

 

Loss on extinguishment of debt

(7,728)

 

 

7,728

 

 

—

 

Income before income taxes

14,479

 

 

12,039

 

 

26,518

 

Income tax expense

26,216

 

 

(27,398)

 

 

(1,182)

 

Net income

40,695

 

 

(15,359)

 

 

25,336

 

Less: Net income attributable to noncontrolling interests

(794)

 

 

—

 

 

(794)

 

Net income attributable to Sterling common stockholders

$

39,901

 

 

$

(15,359)

 

 

$

24,542

 

 

 

 

 

 

 

Net income per share attributable to Sterling common stockholders:

 

 

 

 

 

Basic

$

1.50

 

 

$

(0.58)

 

 

$

0.92

 

Diluted

$

1.47

 

 

$

(0.57)

 

 

$

0.90

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

Basic

26,671

 

 

 

 

26,671

 

Diluted

27,119

 

 

 

 

27,119

 

 

 

 

 

 

 

(1) The summary unaudited adjusted financial data is presented excluding the costs of acquiring Plateau (including related refinancing) and non-cash taxes. This presentation is considered a non-GAAP financial measure, which the Company believes provides a better indication of our operating results prior to the excluded items.

(2) Includes a fourth quarter charge for a legacy project of $10.2 million or $0.36 per diluted share based on 28,201 weighted average common shares outstanding in the quarter.

STERLING CONSTRUCTION COMPANY, INC. & SUBSIDIARIES EBITDA Reconciliation (In thousands) (Unaudited)

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2020

 

2019

 

2020

 

2019

Net income attributable to Sterling common stockholders

$

15,157

 

 

$

7,957

 

 

$

36,482

 

 

$

17,600

 

Depreciation and amortization

8,098

 

 

3,815

 

 

24,639

 

 

12,288

 

Interest expense, net of interest income

7,154

 

 

2,693

 

 

22,391

 

 

8,002

 

Income tax (benefit) expense

6,280

 

 

913

 

 

14,712

 

 

1,782

 

EBITDA (1)

36,689

 

 

15,378

 

 

98,224

 

 

39,672

 

Acquisition related costs

401

 

 

1,896

 

 

1,013

 

 

2,158

 

Adjusted EBITDA (2)

$

37,090

 

 

$

17,274

 

 

$

99,237

 

 

$

41,830

 

 

 

 

 

 

 

 

 

(1) The Company defines EBITDA as GAAP net income (loss) attributable to Sterling common stockholders, adjusted for depreciation and amortization, net interest expense, taxes, and loss on extinguishment of debt.

 

 

 

 

 

 

 

 

(2) Adjusted EBITDA excludes the impact of acquisition related costs.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20201102005996/en/

Sterling Construction Company, Inc. Ron Ballschmiede, Chief Financial Officer 281-214-0800

Investor Relations Counsel: The Equity Group Inc. Fred Buonocore, CFA 212-836-9607 Mike Gaudreau 212-836-9620