Sterling Announces Extension of Credit Facility

Rhea-AI Summary

Sterling Infrastructure, Inc. (NasdaqGS: STRL) has announced an 18-month extension of its 2019 credit agreement, with a $425 million credit facility consisting of a term loan and a revolving credit facility. As of September 30, 2023, $347.4 million in borrowings were outstanding under the term loan, the revolving credit facility was undrawn, and cash and cash equivalents totaled $409.4 million. The credit agreement amendment was led by BMO Capital Markets Corp. and BMO Bank N.A. Sterling's CEO, Joe Cutillo, expressed satisfaction with the support and confidence of existing lenders and highlighted the capital flexibility provided by the extension to facilitate organic growth and M&A opportunities.

Insights

Financial Analyst

The extension of Sterling Infrastructure's credit agreement is a strategic financial move that offers the company increased liquidity and financial flexibility. The unchanged terms of the agreement, including the size and covenants, imply lender confidence in the company's ability to meet its obligations. The fact that the revolving credit facility remains undrawn and the company has a significant cash reserve suggests a strong liquidity position.

From a financial analysis perspective, the extension could be seen as a preemptive measure to secure favorable credit terms before potential interest rate hikes or market volatility. The extension to April 2026 provides a longer runway for Sterling to execute its growth strategies without the immediate pressure of refinancing. For stakeholders, this could indicate a stable financial outlook and potential for value creation through planned mergers and acquisitions.

Credit Market Analyst

The amendment of the credit agreement within the context of 'gradually improving credit markets', as mentioned by Sterling's CEO, reflects a tactical approach to capital management. The credit markets have been fluctuating and securing an 18-month extension under the same economic terms is advantageous. It demonstrates the company's ability to negotiate under potentially tightening credit conditions.

For investors, the unchanged covenants and economics of the credit facility could indicate that Sterling is not perceived as a higher risk by its lenders, which is a positive signal. Additionally, the involvement of a reputable institution like BMO Capital Markets in leading the amendment process adds credibility to the transaction. This move could be interpreted as a sign of underlying strength in Sterling's financial position and operational performance.

M&A Analyst

The CEO's mention of using the extended credit facility for growth through mergers and acquisitions (M&A) is noteworthy. The M&A landscape has been dynamic and companies with available capital and credit are better positioned to capitalize on opportunities. Sterling's undrawn revolving credit facility and substantial cash reserves provide it with the means to be an active player in the M&A space.

This strategic positioning could potentially lead to future growth and diversification of Sterling's business portfolio. For industry peers and competitors, this move by Sterling could signal an increase in M&A activity and possibly trigger similar financial strategies in the sector. Stakeholders should monitor Sterling's M&A activity closely as it can significantly influence the company's market position and stock performance.

THE WOODLANDS, Texas, Dec. 28, 2023 /PRNewswire/ -- Sterling Infrastructure, Inc. (NasdaqGS: STRL) ("Sterling" or "the Company") today announced that it requested and received an amendment to its 2019 credit agreement that extends the maturity of the credit facility by 18-months to April of 2026.

The size, economics and covenants of the amended credit agreement are substantially unchanged. The $425 million credit facility under the amended credit agreement consists of a $350 million term loan and a $75 million revolving credit facility. As of September 30, 2023, $347.4 million in borrowings were outstanding under the term loan, the revolving credit facility was undrawn and cash and cash equivalents totaled $409.4 million. The credit agreement amendment was led by BMO Capital Markets Corp., as Joint Lead Arranger and Joint Book Runner, and BMO Bank N.A., as Administrative Agent.

CEO Remarks
"We were pleased to receive the support and confidence of all of our existing lenders including lead BMO," stated Joe Cutillo, Sterling's CEO. "This extension provides capital flexibility in the gradually improving credit markets, which we believe is a favorable position as we continue to grow the business both organically and through M&A opportunities."

About Sterling

Sterling Infrastructure, Inc., ("Sterling," "the Company," "we," "our" or "us"), a Delaware corporation, operates through a variety of subsidiaries within three segments specializing in E-Infrastructure, Transportation and Building Solutions in the United States, primarily across the Southern, Northeastern, Mid-Atlantic and Rocky Mountain regions and Hawaii. E-Infrastructure Solutions provides advanced, large-scale site development services for manufacturing, data centers, e-commerce distribution centers, warehousing, power generation and more. Transportation Solutions includes infrastructure and rehabilitation projects for highways, roads, bridges, airports, ports, rail and storm drainage systems. Building Solutions projects include residential and commercial concrete foundations for single-family and multi-family homes, parking structures, elevated slabs, other concrete work, and residential plumbing services. From strategy to operations, we are committed to sustainability by operating responsibly to safeguard and improve society's quality of life. Caring for our people and our communities, our customers and our investors – that is The Sterling Way.

Joe Cutillo, CEO, "We build and service the infrastructure that enables our economy to run,
our people to move and our country to grow."

Important Information for Investors and Stockholders

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. Forward-looking statements included herein relate to matters that are not based on historical facts and reflect our current expectations as of the date of this press release, including statements about: our outlook, our business strategy, our financial strategy and allocation of cash flows. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control, which include: changes in the Company's financial position, business strategy, and other factors identified in the Company's filings with the Securities and Exchange Commission. Accordingly, any forward-looking statements should be considered in light of these risks. The forward-looking statements speak only as of the date made, and we undertake no obligation to publicly update or revise any forward-looking statements for any reason, whether as a result of new information, future events or developments, changed circumstances, or otherwise, notwithstanding any changes in our assumptions, changes in business plans, actual experience or other changes. These cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf.

Investor Relations Company Contact
Sterling Infrastructure, Inc.
Noelle Dilts, VP IR and Corporate Strategy
281-214-0795

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SOURCE Sterling Infrastructure, Inc.

FAQ

What is the latest announcement from Sterling Infrastructure, Inc. (NasdaqGS: STRL)?

Sterling Infrastructure, Inc. (NasdaqGS: STRL) has announced an 18-month extension of its 2019 credit agreement, with a $425 million credit facility.

What is the composition of the $425 million credit facility mentioned in the announcement by Sterling Infrastructure, Inc. (NasdaqGS: STRL)?

The credit facility consists of a $350 million term loan and a $75 million revolving credit facility.

Who led the credit agreement amendment mentioned in the press release from Sterling Infrastructure, Inc. (NasdaqGS: STRL)?

The credit agreement amendment was led by BMO Capital Markets Corp. and BMO Bank N.A.

What is the current financial status of Sterling Infrastructure, Inc. (NasdaqGS: STRL) as per the press release?

As of September 30, 2023, $347.4 million in borrowings were outstanding under the term loan, the revolving credit facility was undrawn, and cash and cash equivalents totaled $409.4 million.

What are the CEO's remarks regarding the credit agreement amendment in the press release from Sterling Infrastructure, Inc. (NasdaqGS: STRL)?

Sterling's CEO, Joe Cutillo, expressed satisfaction with the support and confidence of existing lenders and highlighted the capital flexibility provided by the extension to facilitate organic growth and M&A opportunities.