Sterling Reports Record First Quarter 2021 Results
Sterling Construction Company reported strong financial results for Q1 2021, with revenues of $315.3 million, up from $296.7 million in Q1 2020. The gross margin improved to 14.3% compared to 11.9% the previous year. Operating income rose to $22.8 million from $12.1 million, while net income reached $10.6 million, significantly higher than $3.1 million in Q1 2020. Earnings per share (EPS) increased to $0.37 from $0.11. Cash from operations also saw substantial growth, totaling $38.7 million compared to $10.8 million in the previous year.
- Revenue increased to $315.3 million from $296.7 million year-over-year.
- Gross margin improved to 14.3% compared to 11.9% in Q1 2020.
- Operating income grew to $22.8 million from $12.1 million year-over-year.
- Net income rose to $10.6 million, up from $3.1 million in the prior year.
- Earnings per share (EPS) increased to $0.37 from $0.11.
- Cash and cash equivalents decreased to $61.4 million from $66.2 million at year-end 2020.
- Debt repayments totaled $30.5 million for Q1 2021.
Sterling Construction Company, Inc. (NasdaqGS: STRL) (“Sterling” or the “Company”) today announced financial results for the first quarter 2021.
Consolidated First Quarter 2021 Financial Results Compared to First Quarter 2020:
-
Revenues were
$315.3 million compared to$296.7 million ; -
Gross margin was
14.3% of revenues compared to11.9% ; -
Operating income was
$22.8 million compared to$12.1 million ; -
Net Income was
$10.6 million compared to$3.1 million ; -
EPS was
$0.37 compared to$0.11 ; and, -
EBITDA(1) was
$29.9 million compared to$20.3 million .
Consolidated Financial Position and Liquidity:
-
Cash and Cash Equivalents were
$61.4 million at March 31, 2021 compared to$66.2 million at December 31, 2020; -
Cash provided by operating activities were
$38.7 million for the three months ended March 31, 2021 compared to$10.8 million for the comparable prior year period; -
Repayments of debt totaled
$30.5 million for the three months ended March 31, 2021; - Forward looking EBITDA coverage ratio of 2.4X at March 31, 2021.
Heavy Civil and Specialty Services Backlog Highlights:
-
Backlog at March 31, 2021 was
$1.64 billion , up from$1.18 billion at December 31, 2020. -
Combined Backlog at March 31, 2021 was
$1.71 billion , up from$1.53 billion at December 31, 2020, and includes Unsigned Low-bid Awards of$75.7 million and$356.9 million at March 31, 2021 and December 31, 2020, respectively.
The Company Reaffirms 2021 Full Year Revenue and Income Guidance:
-
Revenues:
$1.46 billion to$1.49 billion . -
Net Income:
$52 million to$55 million .
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. See the “EBITDA Reconciliation” section below for more information. |
CEO Remarks and Outlook
“Our first quarter was an excellent start to the year, even in the face of the weather challenges we encountered across much of our geographic footprint in February,” stated Joe Cutillo, Sterling’s Chief Executive Officer. “We attribute our strong top and bottom line performance to our great team of people and the strategy that we have been implementing over the past several years to diversify our revenue streams and focus on higher margin lower risk opportunities where we can bring our experience and unique skill set to bear in order to bring value to our customers.”
“Once again, our Specialty Services segment was a major contributor to our strong first quarter results. We continued to execute well on our robust pipeline of projects for large, high-profile customers as they develop new distribution centers, data centers and warehouses. Backlog and bidding activity for Specialty Services remains robust, giving us good visibility for the balance of 2021.”
“Our Residential segment turned in an impressively strong performance in the face of the weather-related disruption in Dallas-Fort Worth and Houston. Our Residential operations lost workdays for a substantial portion of February due to historically freezing conditions and still managed to complete a record number of slabs for the quarter, and we’re seeing a similar rate of demand and productivity continuing thus far in the second quarter. First quarter segment margins reflected the impact of supply chain pressures, specifically relating to the cost of concrete, lumber and steel. We are watching these trends closely and have already implemented price increases in the first quarter.”
Mr. Cutillo continued, “Our Heavy Civil revenues are down
“We continued to strengthen our balance sheet in the first quarter, with cash flow from operations of
Mr. Cutillo concluded, “Due to the strong results of our first quarter, we reaffirm our full-year 2021 guidance and believe that we will be on the higher end of the guidance range.”
Conference Call
Sterling’s management will hold a conference call to discuss these results and recent corporate developments on Tuesday, May 4, 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. 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 land development activities (including 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 may contain “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.
If applicable, reconciliations of Non-GAAP financial measures to the most comparable GAAP measures will be provided 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 |
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
|||||||
(In thousands, except per share data) |
|||||||
(Unaudited) |
|||||||
|
Three Months Ended March 31, |
||||||
|
2021 |
|
2020 |
||||
Revenues |
$ |
315,316 |
|
|
$ |
296,688 |
|
Cost of revenues |
(270,284 |
) |
|
(261,443 |
) |
||
Gross profit |
45,032 |
|
|
35,245 |
|
||
General and administrative expense |
(17,099 |
) |
|
(17,604 |
) |
||
Intangible asset amortization |
(2,866 |
) |
|
(2,837 |
) |
||
Acquisition related costs |
— |
|
|
(473 |
) |
||
Other operating expense, net |
(2,312 |
) |
|
(2,228 |
) |
||
Operating income |
22,755 |
|
|
12,103 |
|
||
Interest income |
14 |
|
|
99 |
|
||
Interest expense |
(6,004 |
) |
|
(7,803 |
) |
||
Loss on extinguishment of debt |
(337 |
) |
|
— |
|
||
Income before income taxes |
16,428 |
|
|
4,399 |
|
||
Income tax expense |
(4,760 |
) |
|
(1,184 |
) |
||
Net income |
11,668 |
|
|
3,215 |
|
||
Less: Net income attributable to noncontrolling interests |
(1,113 |
) |
|
(100 |
) |
||
Net income attributable to Sterling common stockholders |
$ |
10,555 |
|
|
$ |
3,115 |
|
|
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FAQ
What are Sterling Construction Company’s Q1 2021 financial results?
For Q1 2021, Sterling Construction reported revenues of $315.3 million, a gross margin of 14.3%, operating income of $22.8 million, net income of $10.6 million, and an EPS of $0.37.
How did Sterling Construction’s revenue change in Q1 2021 versus Q1 2020?
Sterling Construction's revenue increased from $296.7 million in Q1 2020 to $315.3 million in Q1 2021.
What is the EPS for Sterling Construction in Q1 2021?
Sterling Construction reported an EPS of $0.37 for Q1 2021, up from $0.11 in Q1 2020.
How much cash did Sterling Construction provide from operating activities in Q1 2021?
Sterling Construction generated $38.7 million from operating activities in Q1 2021, compared to $10.8 million in Q1 2020.
What was the change in Sterling Construction’s cash and cash equivalents by the end of Q1 2021?
As of March 31, 2021, Sterling Construction's cash and cash equivalents were $61.4 million, down from $66.2 million at the end of 2020.
Sterling Infrastructure, Inc.
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THE WOODLANDS
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