Last10K.com

Sterling Construction Co Inc (STRL) SEC Filing 8-K Material Event for the period ending Monday, May 4, 2020

Sterling Construction Co Inc

CIK: 874238 Ticker: STRL

Exhibit 99.1

sterling_logoa04.jpg
NEWS RELEASE
For Immediate Release:
May 4, 2020

Sterling Reports First Quarter 2020 Results
Record EBITDA (1) 
Record Backlog of $1.2 billion and Backlog Gross Margin of 12.7%

THE WOODLANDS, TXMay 4, 2020 – Sterling Construction Company, Inc. (NasdaqGS: STRL) (“Sterling” or “the Company”) today announced financial results for the three months ended March 31, 2020.

Consolidated First Quarter 2020 Financial Results Compared to First Quarter 2019:
Revenues were $296.7 million compared to $223.9 million;
Gross margin was 11.9% of revenues compared to 8.7%;
Plateau acquisition related costs totaled $0.5 million or $0.02 per diluted share;
Net income attributable to Sterling common stockholders was $3.1 million or $3.5 million on an adjusted basis(1) compared to $1.8 million or $2.0 million on an adjusted basis(1);
Net income per diluted share attributable to Sterling common stockholders was $0.11 or $0.12 on an adjusted basis(1) compared to $0.07;
Cash flows from operations was $10.8 million, an improvement of $30.0 million; and,
Adjusted EBITDA(1) was $20.8 million compared to $9.0 million.
Consolidated Financial Position and Liquidity at March 31, 2020:
Cash and Cash Equivalents were $73.9 million;
Debt, net of cash totaled $385.1 million; and,
Remaining availability of $25 million under our $75 million Revolving Credit Facility.
Heavy Civil and Specialty Services Backlog Highlights
Combined Backlog at March 31, 2020 was $1.43 billion, up from $1.34 billion at December 31, 2019. Combined Backlog consists of $1.19 billion of Backlog and $241 million of Unsigned Low-bid Awards as of March 31, 2020 compared to $1.07 billion and $273 million at December 31, 2019, respectively. No residential contracts are included in Backlog.
Total margin in Backlog has increased approximately 120 basis points, from 11.5% at December 31, 2019 to 12.7% at March 31, 2020. Combined Backlog gross margin improved from 11.0% at December 31, 2019 to 12.1% at March 31, 2020.
Due to the uncertain future COVID-19 financial impacts over the balance of the year, we have withdrawn our previously articulated guidance until we have greater visibility.

(1) 
See the “Reconciliation of Non-GAAP Supplemental Adjusted Financial Data” section below for more information.


CEO Remarks and Outlook
Sterling’s Chief Executive Officer, Joe Cutillo, stated, “I’m very proud of our 3,000 employees and their ability to take care of our customers, protect themselves and their families and adapt to a rapidly changing environment associated with the COVID-19 pandemic. Their hard work, ingenuity and quick actions enabled us to deliver record first quarter results that were consistent with our expectations heading into the quarter. Additionally, our first quarter results were aligned with our strategic objectives to continue to grow our bottom line profits faster than top line revenue. Our recently acquired Plateau business, which is the largest component of the Specialty Services segment, exceeded our expectations in financial performance and booked over $100 million of new business in the quarter. Our Residential operating income was slightly lower than the prior year quarter due to heavy March rains, but was up sequentially over the fourth quarter of 2019 as we continue to expand into the Houston market. The Heavy Civil segment saw the largest unfavorable productivity impact in the first quarter related to the pandemic as customers and back offices began to work virtually and new procedures and protocol were developed and implemented into field operations. Despite the COVID-19 pandemic headwinds, the Heavy Civil segment managed to approach achieving our first quarter financial expectations.”
“As we look forward, all our segments have been deemed to be a component of “Essential Critical Infrastructure” per the National Cybersecurity and Infrastructure Agency. We have record backlogs in both the Heavy Civil and Specialty Services segments and remain in an enviable position versus many other businesses. However, we expect to begin to see more significant impacts related to the COVID-19 pandemic in the second and third quarters as our home builder customers expect demand to slow, and new commercial projects related to multifamily and offices may be delayed.”
Mr. Cutillo concluded, “Due to the anticipated slowdown in project activity for our residential, multi-family and commercial markets, along with the high potential of other unforeseen impacts, we have decided to withdraw our previously articulated guidance until we have greater visibility into these markets. Despite the near-term challenges created by the COVID-19 pandemic, the profit and cash flow generated by of each of our businesses in the first quarter exemplify the continued execution of our strategy. Importantly, we generated positive free cash flow in our seasonally weak first quarter, and our liquidity position remains strong, providing us with the financial flexibility to continue to execute on our record combined backlog even if business conditions worsen, and leaving us well prepared to resume the growth trajectory of our bottom line when the economic environment normalizes.”



Conference Call
Sterling’s management will hold a conference call to discuss these results and recent corporate developments on Tuesday, May 5, 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 operating groups 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 scope and duration of the COVID-19 pandemic and its continuing impact on national and global economic conditions; and our business strategy; financial strategy; and 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.
Contact:
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



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

 
Three Months Ended March 31,
 
2020
 
2019
Revenues
$
296,688

 
$
223,949

Cost of revenues
(261,443
)
 
(204,446
)
Gross profit
35,245

 
19,503

General and administrative expense
(17,604
)
 
(11,889
)
Intangible asset amortization
(2,837
)
 
(600
)
Acquisition related costs
(473
)
 

Other operating expense, net
(2,228
)
 
(2,294
)
Operating income
12,103

 
4,720

Interest income
99

 
364

Interest expense
(7,803
)
 
(3,060
)
Income before income taxes
4,399

 
2,024

Income tax expense
(1,184
)
 
(163
)
Net income
3,215

 
1,861

Less: Net income attributable to noncontrolling interests
(100
)
 
(46
)
Net income attributable to Sterling common stockholders
$
3,115

 
$
1,815

 
 
 
 
Net income per share attributable to Sterling common stockholders:
 

 
 
Basic
$
0.11

 
$
0.07

Diluted
$
0.11

 
$
0.07

 
 
 
 
Weighted average common shares outstanding:
 
 
 
Basic
27,736

 
26,377

Diluted
27,992

 
26,723





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

 
Three Months Ended March 31,
 
2020
 
% of
Revenue
 
2019
 
% of
Revenue
Revenue
 

 
 
 
 

 
 
Heavy Civil
$
155,615

 
53%
 
$
150,505

 
67%
Specialty Services
104,723

 
35%
 
30,679

 
14%
Residential
36,350

 
12%
 
42,765

 
19%
Total Revenue
$
296,688

 
 
 
$
223,949

 
 
Operating Income (Loss)
 

 
 
 
 

 
 
Heavy Civil
$
(3,622
)
 
(2.3)%
 
$
(2,147
)
 
(1.4)%
Specialty Services
11,114

 
10.6%
 
1,048

 
3.4%
Residential
5,084

 
14.0%
 
5,819

 
13.6%
Subtotal
12,576

 
4.2%
 
4,720

 
2.1%
Acquisition related costs
(473
)
 
 
 

 
 
Total Operating Income
$
12,103

 
4.1%
 
$
4,720

 
2.1%



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

 
March 31,
2020
 
December 31,
2019
Assets
 
 
 

Current assets:
 
 
 
Cash and cash equivalents
$
73,905

 
$
45,733

Accounts receivable, including retainage
221,268

 
248,247

Costs and estimated earnings in excess of billings
54,791

 
42,555

Receivables from and equity in construction joint ventures
10,789

 
9,196

Other current assets
10,335

 
11,790

Total current assets
371,088

 
357,521

Property and equipment, net
117,818

 
116,030

Operating lease right-of-use assets
14,790

 
13,979

Goodwill
191,892

 
191,892

Other intangibles, net
253,486

 
256,323

Deferred tax asset, net
27,149

 
26,012

Other non-current assets, net
172

 
183

Total assets
$
976,395

 
$
961,940

Liabilities and Stockholders’ Equity
 
 
 

Current liabilities:
 
 
 
Accounts payable
$
123,172

 
$
137,593

Billings in excess of costs and estimated earnings
79,293

 
85,011

Current maturities of long-term debt
50,211

 
42,473

Current portion of long-term lease obligations
7,410

 
7,095

Income taxes payable
1,656

 
1,212

Accrued compensation
14,187

 
13,727

Other current liabilities
10,403

 
6,393

Total current liabilities
286,332

 
293,504

Long-term debt
408,828

 
390,627

Long-term lease obligations
7,465

 
6,976

Members’ interest subject to mandatory redemption and undistributed earnings
49,186

 
49,003

Other long-term liabilities
5,654

 
619

Total liabilities
757,465

 
740,729

Stockholders’ equity:
 
 
 

Common stock, par value $0.01 per share; 38,000 shares authorized, 28,282 and 28,290 shares issued, 27,966 and 27,772 shares outstanding
283

 
283

Additional paid in capital
250,689

 
251,019

Treasury Stock, at cost: 316 and 518 shares
(4,247
)
 
(6,142
)
Retained deficit
(21,918
)
 
(25,033
)
Accumulated other comprehensive loss
(7,270
)
 
(209
)
Total Sterling stockholders’ equity
217,537

 
219,918

Noncontrolling interests
1,393

 
1,293

Total stockholders’ equity
218,930

 
221,211

Total liabilities and stockholders’ equity
$
976,395

 
$
961,940





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

 
Three Months Ended March 31,
 
2020
 
2019
Cash flows from operating activities:
 

 
 

Net income
$
3,215

 
$
1,861

Adjustments to reconcile net income to net cash provided by (used in) operating activities:
 
 
 
Depreciation and amortization
8,285

 
4,302

Amortization of debt issuance costs
1,022

 
833

Gain on disposal of property and equipment
(393
)
 
(38
)
Deferred taxes
913

 
141

Stock-based compensation expense
2,234

 
1,021

Loss on interest rate hedge
171

 

Changes in operating assets and liabilities
(4,676
)
 
(27,362
)
Net cash provided by (used in) operating activities
10,771

 
(19,242
)
Cash flows from investing activities:
 
 
 
Capital expenditures
(7,354
)
 
(3,814
)
Proceeds from sale of property and equipment
512

 
137

Net cash used in investing activities
(6,842
)
 
(3,677
)
Cash flows from financing activities:
 
 
 
Borrowings on revolving credit facility
30,000

 

Repayments of long-term debt
(5,082
)
 
(5,610
)
Distributions to noncontrolling interest owners

 
(5,100
)
Purchase of treasury stock

 
(3,201
)
Other
(675
)
 
(501
)
Net cash provided by (used in) financing activities
24,243

 
(14,412
)
Net change in cash and cash equivalents
28,172

 
(37,331
)
Cash and cash equivalents at beginning of period
45,733

 
94,095

Cash and cash equivalents at end of period
$
73,905

 
$
56,764






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 March 31, 2020
 
As Reported (GAAP)
 
Adjustment
 
Adjusted
(Non-GAAP)
Revenues
$
296,688

 
$

 
$
296,688

Cost of revenues
(261,443
)
 

 
(261,443
)
Gross profit
35,245

 

 
35,245

General and administrative expense
(17,604
)
 

 
(17,604
)
Intangible asset amortization
(2,837
)
 

 
(2,837
)
Acquisition related costs
(473
)
 
473

 

Other operating expense, net
(2,228
)
 

 
(2,228
)
Operating income
12,103

 
473

 
12,576

Interest income
99

 

 
99

Interest expense
(7,803
)
 

 
(7,803
)
Income before income taxes
4,399

 
473

 
4,872

Income tax expense (2)
(1,184
)
 
(99
)
 
(1,283
)
Net income
3,215

 
374

 
3,589

Less: Net income attributable to noncontrolling interests
(100
)
 

 
(100
)
Net income attributable to Sterling common stockholders
$
3,115

 
$
374

 
$
3,489

 
 
 
 
 
 
Net income per share attributable to Sterling common stockholders:
 

 
 
 
 
Basic
$
0.11

 
$
0.02

 
$
0.13

Diluted
$
0.11

 
$
0.01

 
$
0.12

 
 
 
 
 
 
Weighted average common shares outstanding:
 
 
 
 
 
Basic
27,736

 

 
27,736

Diluted
27,992

 

 
27,992

 
 
 
 
 
 
(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 $1,283 includes non-cash federal income tax expense of $1,012.





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 March 31, 2019
 
As Reported (GAAP)
 
Adjustment
 
Adjusted
(Non-GAAP)
Revenues
$
223,949

 
$

 
$
223,949

Cost of revenues
(204,446
)
 

 
(204,446
)
Gross profit
19,503

 

 
19,503

General and administrative expense
(11,889
)
 

 
(11,889
)
Intangible asset amortization
(600
)
 

 
(600
)
Other operating expense, net
(2,294
)
 

 
(2,294
)
Operating income
4,720

 

 
4,720

Interest income
364

 

 
364

Interest expense
(3,060
)
 

 
(3,060
)
Income before income taxes
2,024

 

 
2,024

Income tax (expense) benefit
(163
)
 
141

 
(22
)
Net income
1,861

 
141

 
2,002

Less: Net income attributable to noncontrolling interests
(46
)
 

 
(46
)
Net income attributable to Sterling common stockholders
$
1,815

 
$
141

 
$
1,956

 
 
 
 
 
 
Net income per share attributable to Sterling common stockholders:
 

 
 
 
 
Basic
$
0.07

 
$

 
$
0.07

Diluted
$
0.07

 
$

 
$
0.07

 
 
 
 
 
 
Weighted average common shares outstanding:
 
 
 
 
 
Basic
26,377

 

 
26,377

Diluted
26,723

 

 
26,723

 
 
 
 
 
 
(1)    The summary unaudited adjusted financial data is presented excluding the 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.





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

 
Three Months Ended March 31,
 
2020
 
2019
Net income attributable to Sterling common stockholders
$
3,115

 
$
1,815

Depreciation
5,448

 
3,702

Amortization
2,837

 
600

Interest expense, net of interest income
7,704

 
2,696

Income tax (benefit) expense
1,184

 
163

EBITDA (1)
20,288

 
8,976

Acquisition related costs
473

 

Adjusted EBITDA (2)
$
20,761

 
$
8,976

 
 
 
 
(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 differences made from one to another to evaluate Sterling Construction Co Inc's financial trajectory

Compare SEC Filings Year-over-Year (YoY) and Quarter-over-Quarter (QoQ)
Sample 10-K Year-over-Year (YoY) Comparison

Compare this 8-K Corporate News to its predecessor by reading our highlights to see what text and tables were  removed  ,   added    and   changed   by Sterling Construction Co Inc.

Continue

Assess how Sterling Construction Co Inc's management team is paid from their Annual Proxy

Definitive Proxy Statement (Form DEF 14A)
Screenshot example of actual Proxy Statement

Sterling Construction Co Inc's Definitive Proxy Statement (Form DEF 14A) filed after their 2020 10-K Annual Report includes:

  • Voting Procedures
  • Board Members
  • Executive Team
  • Salaries, Bonuses, Perks
  • Peers / Competitors

Continue

SEC Filing Tools

Material Contracts, Statements, Certifications & more

Sterling Construction Co Inc provided additional information to their SEC Filing as exhibits

Ticker: STRL
CIK: 874238
Form Type: 8-K Corporate News
Accession Number: 0000874238-20-000052
Submitted to the SEC: Mon May 04 2020 7:29:04 PM EST
Accepted by the SEC: Tue May 05 2020
Period: Monday, May 4, 2020
Industry: Heavy Construction Other Than Bldg Const Contractors
Events:
  1. Earnings Release
  2. Financial Exhibit
  3. Regulated Disclosure

External Resources:
Stock Quote
Social Media

Bookmark the Permalink:
https://last10k.com/sec-filings/strl/0000874238-20-000052.htm