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Sterling Reports Strong 2020 Fourth Quarter and Record Full Year Results

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Record Full Year Operating Cash Flow Drives $77.7 million of Debt Payments

2021 Midpoint EPS Guidance Calling for Growth of 22%

Sterling Construction Company, Inc. (NASDAQ:STRL) ("Sterling" or the "Company") today announced financial results for the fourth quarter and full year ended 2020.

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

  • Revenues were $347.2 million compared to $346.5 million;
  • Gross margin was 13.4% of revenues compared to 9.7%;
  • Operating income was $20.9 million compared to $9.7 million or $11.9 million on an adjusted basis(1);
  • Net Income attributable to Sterling common stockholders was $5.8 million in 2020. The comparable 2019 amount was $22.3 million or $6.3 million on an adjusted basis(1);
  • Adjusted EBITDA(2) was $28.9 million compared to $20.2 million.

Consolidated Full Year 2020 Financial Results Compared to Full Year 2019:

  • Revenues were $1.4 billion compared to $1.1 billion;
  • Gross margin was 13.4% of revenues compared to 9.6%;
  • Operating income was $94.9 million compared to $37.8 million or $42.1 million on an adjusted basis(1);
  • Net Income attributable to Sterling common stockholders was $42.3 million in 2020. The comparable 2019 amount was $39.9 million or $24.5 million on an adjusted basis(1);
  • Adjusted EBITDA(2) was $128.1 million compared to $62.0 million.

Consolidated Financial Position and Liquidity:

  • Cash flows from operations were $119.3 million for the year ended December 31, 2020 compared to $41.1 million for the comparable prior year period;
  • Debt totaled $368.7 million (or $302.5 million, net of cash) at December 31, 2020 compared to $433.1 million (or $387.4 million, net of cash) at December 31, 2019.

Heavy Civil and Specialty Services Backlog Highlights:

  • Backlog at December 31, 2020 was $1.18 billion, up from $1.07 billion at December 31, 2019. Gross margin in Backlog increased approximately 50 basis points to 12.0% at December 31, 2020 from 11.5% at December 31, 2019.
  • Combined Backlog at December 31, 2020 was $1.53 billion, up from $1.34 billion at December 31, 2019, and includes Unsigned Low-bid Awards of $356.9 million and $273.5 million at December 31, 2020 and December 31, 2019, respectively. Gross margin in Combined Backlog has increased approximately 80 basis points to 11.8% at December 31, 2020 from 11.0% at December 31, 2019.

2021 Full Year Revenue and Income Guidance:

  • Revenues: $1.46 billion to $1.49 billion.
  • Net Income: $52 million to $55 million.
  • Expected dilutive average shares outstanding: 29.2 million.

(1)

 

Adjusted basis excludes costs related to the acquisition of Plateau (including related refinancing) and non-cash taxes. See the "Reconciliation of Non-GAAP Supplemental Adjusted Financial Data" section below for more information.

(2)

The Company defines Adjusted EBITDA as GAAP net income attributable to Sterling common stockholders, adjusted for depreciation and amortization, net interest expense, taxes, acquisition related costs, and loss on extinguishment of debt. See the "EBITDA Reconciliation" section below for more information.

CEO Remarks and Outlook

"We are very proud of what we, as a Company, have achieved in such a challenging year," stated Joe Cutillo, Sterling's Chief Executive Officer. "With our primary focus on the safety of our people during this pandemic, it is truly amazing how they all came together to deliver another record year. These results are a direct result of our people, our culture and our strategy."

"Our Specialty Services segment continued its outstanding performance in bottom line results due in large part to consistent and highly effective project execution capabilities. Our Specialty Services backlog remains strong, as market demand for their highly specialized capabilities for large distribution centers, data centers and warehouses continues. Our Residential segment continued its healthy growth and expansion into the Houston market. Operating profit as a percentage of revenue dropped slightly year over year, as a result of second quarter temporary price concessions due to COVID and inflation and availability issues with materials. We were able to recoup the temporary price concessions in late 2020, and began passing on material increases in early 2021. The Texas home building market continues to remain strong. As a matter of fact, in the fourth quarter, we poured more slabs than any quarter in company history; something we view as indicative of continued relocation trends we have been seeing from other states to Texas. Lastly, our Heavy Civil segment operating income was up significantly from last year's fourth quarter as we continue our shift away from low bid heavy highway projects. Going forward, we expect an improved revenue mix as we progress on the attractive alternative delivery projects we've booked in recent quarters," continued Mr. Cutillo.

"We continue to demonstrate our ability to consistently generate cash. During 2020, we generated $119.3 million of cash flow from operations, and used that cash flow to make debt payments of $77.7 million and invested $30.5 million in capital expenditures, net of proceeds. We believe that we have more than adequate financial flexibility to continue our profitable growth and are in the very early stages of exploring some inorganic growth opportunities, either strategic tuck-in acquisitions, or another business unit that meets our criteria of low risk, high margin, high value add work," added Mr. Cutillo.

Mr. Cutillo concluded, "Based on the anticipated pandemic recovery in the U.S., our strong Backlog and our view on current booking trends and market strength, we expect to generate full year 2021 revenues of between $1.46 billion and $1.49 billion, with a blended gross margin in the 13% to 14% range. Our expectation for 2021 net income attributable to Sterling common stockholders is between $52 million to $55 million. We expect our full year 2021 diluted average common shares outstanding to be approximately 29.2 million. Our 2021 net income guidance includes an effective income tax rate of approximately 30%."

"We continue to be optimistic for a new infrastructure bill, but our 2021 outlook does not assume any major positive changes in government investment in infrastructure. We expect our 2021 EBITDA to be $134 million to $144 million. Given our strong operating performance in 2020, the continued vaccine rollout, our cash flow generation and debt reduction, we are very enthusiastic about our prospects for generating additional shareholder value during the full year of 2021."

Conference Call

Sterling's management will hold a conference call to discuss these results and recent corporate developments on Wednesday, March 3, 2021 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") 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, EBITDA 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, additional actions that may be taken by governmental authorities to contain the COVID-19 pandemic or to address its impact, including the distribution, effectiveness and acceptance of vaccines, and the potential ongoing or further negative impact of the COVID-19 pandemic on the global economy and financial markets; 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

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

 

 

Three Months Ended

December 31,

 

Twelve Months Ended

December 31,

 

2020

 

2019

 

2020

 

2019

Revenues

$

347,228

 

 

$

346,544

 

 

$

1,427,412

 

 

$

1,126,278

 

Cost of revenues

(300,619

)

 

(312,965

)

 

(1,236,043

)

 

(1,018,484

)

Gross profit

46,609

 

 

33,579

 

 

191,369

 

 

107,794

 

General and administrative expense

(20,206

)

 

(16,898

)

 

(71,415

)

 

(49,200

)

Intangible asset amortization

(2,867

)

 

(2,895

)

 

(11,436

)

 

(4,695

)

Acquisition related costs

(13

)

 

(2,153

)

 

(1,026

)

 

(4,311

)

Other operating expense, net

(2,611

)

 

(1,901

)

 

(12,600

)

 

(11,837

)

Operating income

20,912

 

 

9,732

 

 

94,892

 

 

37,751

 

Interest income

15

 

 

156

 

 

161

 

 

1,142

 

Interest expense

(6,840

)

 

(7,698

)

 

(29,377

)

 

(16,686

)

Loss on extinguishment of debt

(301

)

 

(7,728

)

 

(301

)

 

(7,728

)

Income before income taxes

13,786

 

 

(5,538

)

 

65,375

 

 

14,479

 

Income tax (expense) benefit

(7,759

)

 

27,998

 

 

(22,471

)

 

26,216

 

Net income

6,027

 

 

22,460

 

 

42,904

 

 

40,695

 

Less: Net income attributable to noncontrolling interests

(203

)

 

(159

)

 

(598

)

 

(794

)

Net income attributable to Sterling common stockholders

$

5,824

 

 

$

22,301

 

 

$

42,306

 

 

$

39,901

 

 

 

 

 

 

 

 

 

Net income per share attributable to Sterling common stockholders:

 

 

 

 

 

 

 

Basic

$

0.21

 

 

$

0.81

 

 

$

1.52

 

 

$

1.50

 

Diluted

$

0.20

 

 

$

0.79

 

 

$

1.50

 

 

$

1.47

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

Basic

28,043

 

 

27,612

 

 

27,859

 

 

26,671

 

Diluted

29,019

 

 

28,201

 

 

28,195

 

 

27,119

 

 

STERLING CONSTRUCTION COMPANY, INC. & SUBSIDIARIES

SEGMENT INFORMATION

(In thousands)

 

 

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

2020

 

% of

Revenues

 

2019

 

% of

Revenues

 

2020

 

% of

Revenues

 

2019

 

% of

Revenues

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Heavy Civil

$

176,683

 

 

51

%

 

$

190,690

 

 

55

%

 

$

753,824

 

 

52

%

 

$

760,325

 

 

67

%

Specialty Services

128,497

 

 

37

%

 

121,388

 

 

35

%

 

508,894

 

 

36

%

 

212,824

 

 

19

%

Residential

42,048

 

 

12

%

 

34,466

 

 

10

%

 

164,694

 

 

12

%

 

153,129

 

 

14

%

Total Revenues

$

347,228

 

 

 

 

$

346,544

 

 

 

 

$

1,427,412

 

 

 

 

$

1,126,278

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Heavy Civil

$

1,857

 

 

1.1

%

 

$

(7,704

)

 

NM

 

 

$

4,536

 

 

0.6

%

 

$

3,316

 

 

0.4

%

Specialty Services

14,749

 

 

11.5

%

 

14,923

 

 

12.3

%

 

70,583

 

 

13.9

%

 

18,207

 

 

8.6

%

Residential

4,319

 

 

10.3

%

 

4,666

 

 

13.5

%

 

20,799

 

 

12.6

%

 

20,539

 

 

13.4

%

Subtotal

20,925

 

 

6.0

%

 

11,885

 

 

3.4

%

 

95,918

 

 

6.7

%

 

42,062

 

 

3.7

%

Acquisition related costs

(13

)

 

 

 

(2,153

)

 

 

 

(1,026

)

 

 

 

(4,311

)

 

 

Total Operating Income

$

20,912

 

 

6.0

%

 

$

9,732

 

 

2.8

%

 

$

94,892

 

 

6.6

%

 

$

37,751

 

 

3.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NM - Not meaningful

 

STERLING CONSTRUCTION COMPANY, INC. & SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

 

 

December 31,

2020

 

December 31,

2019

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

66,185

 

 

$

45,733

 

Accounts receivable

177,424

 

 

168,872

 

Contract assets

84,975

 

 

94,679

 

Receivables from and equity in construction joint ventures

16,653

 

 

9,196

 

Other current assets

16,306

 

 

11,790

 

Total current assets

361,543

 

 

330,270

 

Property and equipment, net

126,668

 

 

116,030

 

Operating lease right-of-use assets

16,515

 

 

13,979

 

Goodwill

192,014

 

 

191,892

 

Other intangibles, net

244,887

 

 

256,323

 

Deferred tax asset, net

7,817

 

 

26,012

 

Other non-current assets, net

3,250

 

 

183

 

Total assets

$

952,694

 

 

$

934,689

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

95,201

 

 

$

137,593

 

Contract liabilities

114,019

 

 

57,760

 

Current maturities of long-term debt

77,434

 

 

42,473

 

Current portion of long-term lease obligations

7,588

 

 

7,095

 

Income taxes payable

 

 

1,212

 

Accrued compensation

18,013

 

 

13,727

 

Other current liabilities

9,629

 

 

6,393

 

Total current liabilities

321,884

 

 

266,253

 

Long-term debt

291,249

 

 

390,627

 

Long-term lease obligations

8,958

 

 

6,976

 

Members' interest subject to mandatory redemption and undistributed earnings

51,290

 

 

49,003

 

Other long-term liabilities

10,584

 

 

619

 

Total liabilities

683,965

 

 

713,478

 

Stockholders' equity:

 

 

 

Common stock

283

 

 

283

 

Additional paid in capital

256,423

 

 

251,019

 

Treasury Stock, at cost

(1,445

)

 

(6,142

)

Retained earnings (deficit)

17,273

 

 

(25,033

)

Accumulated other comprehensive loss

(5,264

)

 

(209

)

Total Sterling stockholders' equity

267,270

 

 

219,918

 

Noncontrolling interests

1,459

 

 

1,293

 

Total stockholders' equity

268,729

 

 

221,211

 

Total liabilities and stockholders' equity

$

952,694

 

 

$

934,689

 

STERLING CONSTRUCTION COMPANY, INC. & SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

 

 

Twelve Months Ended December 31,

 

2020

 

2019

Cash flows from operating activities:

 

 

 

Net income

$

42,904

 

 

$

40,695

 

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

 

 

 

Depreciation and amortization

32,785

 

 

20,740

 

Amortization of debt issuance costs and non-cash interest

3,193

 

 

3,393

 

Gain on disposal of property and equipment

(1,495

)

 

(527

)

Loss on debt extinguishment

301

 

 

4,334

 

Deferred taxes

19,439

 

 

(27,398

)

Stock-based compensation expense

11,643

 

 

3,788

 

Change in interest rate swap

265

 

 

(30

)

Changes in operating assets and liabilities

10,248

 

 

(3,902

)

Net cash provided by operating activities

119,283

 

 

41,093

 

Cash flows from investing activities:

 

 

 

Plateau acquisition, net of cash acquired

 

 

(396,323

)

Capital expenditures

(32,864

)

 

(15,397

)

Proceeds from sale of property and equipment

2,373

 

 

1,334

 

Net cash used in investing activities

(30,491

)

 

(410,386

)

Cash flows from financing activities:

 

 

 

Cash received from credit facility

 

 

430,000

 

Repayments of debt

(77,745

)

 

(87,621

)

Distributions to noncontrolling interest owners

(432

)

 

(7,360

)

Purchase of treasury stock

 

 

(3,201

)

Debt issuance costs

 

 

(10,688

)

Other

9,837

 

 

(199

)

Net cash (used in) provided by financing activities

(68,340

)

 

320,931

 

Net change in cash and cash equivalents

20,452

 

 

(48,362

)

Cash and cash equivalents at beginning of period

45,733

 

 

94,095

 

Cash and cash equivalents at end of period

$

66,185

 

 

$

45,733

 

 

STERLING CONSTRUCTION COMPANY, INC. & SUBSIDIARIES

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 December 31, 2020

 

As Reported

(GAAP)

 

Adjustment

 

Adjusted

(Non-GAAP)

Revenues

$

347,228

 

 

$

 

 

$

347,228

 

Cost of revenues

(300,619

)

 

 

 

(300,619

)

Gross profit

46,609

 

 

 

 

46,609

 

General and administrative expense

(20,206

)

 

 

 

(20,206

)

Intangible asset amortization

(2,867

)

 

 

 

(2,867

)

Acquisition related costs

(13

)

 

13

 

 

 

Other operating expense, net

(2,611

)

 

 

 

(2,611

)

Operating income

20,912

 

 

13

 

 

20,925

 

Interest income

15

 

 

 

 

15

 

Interest expense

(6,840

)

 

 

 

(6,840

)

Loss on extinguishment of debt

(301

)

 

 

 

(301

)

Income before income taxes

13,786

 

 

13

 

 

13,799

 

Income tax expense

(7,759

)

 

(4

)

 

(7,763

)

Net income

6,027

 

 

9

 

 

6,036

 

Less: Net income attributable to noncontrolling interests

(203

)

 

 

 

(203

)

Net income attributable to Sterling common stockholders

$

5,824

 

 

$

9

 

 

$

5,833

 

 

 

 

 

 

 

Net income per share attributable to Sterling common stockholders:

 

 

 

 

 

Basic

$

0.21

 

 

$

 

 

$

0.21

 

Diluted

$

0.20

 

 

$

 

 

$

0.20

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

Basic

28,043

 

 

 

 

28,043

 

Diluted

29,019

 

 

 

 

29,019

 

 

 

 

 

 

 

(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.

STERLING CONSTRUCTION COMPANY, INC. & SUBSIDIARIES

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 December 31, 2019

 

As Reported

(GAAP)

 

Adjustment

 

Adjusted

(Non-GAAP)

Revenues

$

346,544

 

 

$

 

 

$

346,544

 

Cost of revenues

(312,965

)

 

 

 

(312,965

)

Gross profit

33,579

 

 

 

 

33,579

 

General and administrative expense

(16,898

)

 

 

 

(16,898

)

Intangible asset amortization

(2,895

)

 

 

 

(2,895

)

Acquisition related costs

(2,153

)

 

2,153

 

 

 

Other operating expense, net

(1,901

)

 

 

 

(1,901

)

Operating income

9,732

 

 

2,153

 

 

11,885

 

Interest income

156

 

 

 

 

156

 

Interest expense

(7,698

)

 

 

 

(7,698

)

Loss on extinguishment of debt

(7,728

)

 

7,728

 

 

 

Income before income taxes

(5,538

)

 

9,881

 

 

4,343

 

Income tax benefit (expense)

27,998

 

 

(25,837

)

 

2,161

 

Net income

22,460

 

 

(15,956

)

 

6,504

 

Less: Net income attributable to noncontrolling interests

(159

)

 

 

 

(159

)

Net income attributable to Sterling common stockholders

$

22,301

 

 

$

(15,956

)

 

$

6,345

 

 

 

 

 

 

 

Net income per share attributable to Sterling common stockholders:

 

 

 

 

 

Basic

$

0.81

 

 

$

(0.58

)

 

$

0.23

 

Diluted

$

0.79

 

 

$

(0.57

)

 

$

0.22

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

Basic

27,612

 

 

 

 

27,612

 

Diluted

28,201

 

 

 

 

28,201

 

 

 

 

 

 

 

(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.

STERLING CONSTRUCTION COMPANY, INC. & SUBSIDIARIES

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.

 

 

 

 

 

 

 

Twelve Months Ended December 31, 2020

 

As Reported

(GAAP)

 

Adjustment

 

Adjusted

(Non-GAAP)

Revenues

$

1,427,412

 

 

$

 

 

$

1,427,412

 

Cost of revenues

(1,236,043

)

 

 

 

(1,236,043

)

Gross profit

191,369

 

 

 

 

191,369

 

General and administrative expense

(71,415

)

 

 

 

(71,415

)

Intangible asset amortization

(11,436

)

 

 

 

(11,436

)

Acquisition related costs

(1,026

)

 

1,026

 

 

 

Other operating expense, net

(12,600

)

 

 

 

(12,600

)

Operating income

94,892

 

 

1,026

 

 

95,918

 

Interest income

161

 

 

 

 

161

 

Interest expense

(29,377

)

 

 

 

(29,377

)

Loss on extinguishment of debt

(301

)

 

 

 

(301

)

Income before income taxes

65,375

 

 

1,026

 

 

66,401

 

Income tax expense

(22,471

)

 

(353

)

 

(22,824

)

Net income

42,904

 

 

673

 

 

43,577

 

Less: Net income attributable to noncontrolling interests

(598

)

 

 

 

(598

)

Net income attributable to Sterling common stockholders

$

42,306

 

 

$

673

 

 

$

42,979

 

 

 

 

 

 

 

Net income per share attributable to Sterling common stockholders:

 

 

 

 

 

Basic

$

1.52

 

 

$

0.02

 

 

$

1.54

 

Diluted

$

1.50

 

 

$

0.02

 

 

$

1.52

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

Basic

27,859

 

 

 

 

27,859

 

Diluted

28,195

 

 

 

 

28,195

 

 

 

 

 

 

 

(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.

STERLING CONSTRUCTION COMPANY, INC. & SUBSIDIARIES

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.

 

 

 

 

 

 

 

Twelve Months Ended December 31, 2019

 

As Reported

(GAAP)

 

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 benefit (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.

 

STERLING CONSTRUCTION COMPANY, INC. & SUBSIDIARIES

EBITDA Reconciliation

(In thousands)

(Unaudited)

 

 

Three Months Ended

December 31,

 

Twelve Months Ended

December 31,

 

2020

 

2019

 

2020

 

2019

Net income attributable to Sterling common stockholders

$

5,824

 

 

$

22,301

 

 

$

42,306

 

 

$

39,901

 

Depreciation and amortization

8,146

 

 

8,452

 

 

32,785

 

 

20,740

 

Interest expense, net of interest income

6,825

 

 

7,542

 

 

29,216

 

 

15,544

 

Income tax expense (benefit)

7,759

 

 

(27,998

)

 

22,471

 

 

(26,216

)

Loss on extinguishment of debt

301

 

 

7,728

 

 

301

 

 

7,728

 

EBITDA (1)

28,855

 

 

18,025

 

 

127,079

 

 

57,697

 

Acquisition related costs

13

 

 

2,153

 

 

1,026

 

 

4,311

 

Adjusted EBITDA (2)

$

28,868

 

 

$

20,178

 

 

$

128,105

 

 

$

62,008

 

 

 

 

 

 

 

 

 

(1) The Company defines EBITDA as GAAP net income 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.

 

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