Sterling Reports Record Fourth Quarter and Full Year 2021 Results

Rhea-AI Summary

Sterling Construction Company, Inc. (STRL) announced strong financial results for Q4 and full year 2021. Fourth-quarter revenue reached $401.3 million, a 15.6% increase from the previous year. Net income rose 87.3% to $10.9 million, or $0.37 per diluted share. For the full year, revenue was $1.58 billion, up 10.8%, and net income increased to $62.6 million. The company provided 2022 guidance of $1.825 to $1.875 billion in revenue and net income of $83 to $89 million. Backlog grew to $1.49 billion.

Positive

• Q4 2021 revenue increased 15.6% to $401.3 million.
• Net income for Q4 2021 was $10.9 million, up 87.3% year-over-year.
• Full-year revenue grew by 10.8% to $1.58 billion.
• Backlog increased 27% year-over-year to $1.49 billion.
• 2022 revenue guidance set between $1.825 billion and $1.875 billion.

Negative

• EBITDA for Q4 2021 decreased by 2.7% to $28.1 million.
• Ongoing supply chain and inflation challenges impacting gross margins.

EPS Continues to Outpace Expectations

Delivered Record Full Year Operating Cash Flow

Provides 2022 Full Year Revenue and Net Income Guidance

THE WOODLANDS, Texas--(BUSINESS WIRE)-- Sterling Construction Company, Inc. (NasdaqGS: STRL) (“Sterling” or the “Company”) today announced financial results for the fourth quarter and full year 2021.

Fourth Quarter 2021 Results (as compared to Fourth Quarter 2020)

• Total Revenue of $401.3 million, an increase of 15.6%
• Net Income was $10.9 million, or $0.37 per diluted share, an increase of 87.3%; Adjusted Net Income⁽¹⁾ of $13.9 million or $0.47 per diluted share, an increase of 137.5%
• EBITDA⁽²⁾ of $28.1 million, a decrease of 2.7%; Adjusted EBITDA⁽²⁾ of $32.0 million, an increase of 10.7%
• Cash and Cash Equivalents totaled $81.8 million at December 31, 2021
• Total backlog at December 31, 2021 was $1.49 billion, an increase of 27.0%

For the three months ended December 31, 2021, the Company reported net income of $10.9 million, or $0.37 per diluted share, versus $5.8 million, or $0.20 per diluted share, in the fourth quarter 2020. Revenue increased by 15.6% on a year-over-year basis in the fourth quarter of 2021, supported by broad-based growth across the E-Infrastructure, Building and Transportation solutions segments. EBITDA increased 10.7% to $32.0 million in the fourth quarter of 2021, versus $28.9 million in the prior-year period. Fourth quarter Adjusted EBITDA benefited from strong revenue growth from each segment, partially offset by ongoing supply chain and inflation challenges.

For the full-year ended December 31, 2021, the Company reported net income of $62.6 million, or $2.15 per diluted share, versus $42.3 million, or $1.50 per diluted share, for 2020. Revenue increased by 10.8% on a year-over-year basis for the full-year 2021, driven by solid growth across all segments. Adjusted EBITDA increased 11.5% to $142.9 million for the full-year 2021, versus $128.1 million in the prior-year period. Full-year Adjusted EBITDA benefited from strong revenue growth from each segment and was partially offset by ongoing supply chain and inflation challenges that impacted gross margin realization.

Backlog at December 31, 2021 increased to $1.49 billion, versus $1.18 billion at the prior year-end period. The year-end 2021 backlog includes $210.6 million related to the late December 2021 acquisition of Petillo.

(1) The Company defines Adjusted Net Income as GAAP net income attributable to Sterling’s common stockholders, excluding the Acquisition costs. See the “Non-GAAP Measures” and “Reconciliation of Non-GAAP Supplemental Adjusted Financial Data” sections below for more information.

(2) The Company defines EBITDA as GAAP net income attributable to Sterling’s common stockholders, adjusted for depreciation and amortization, net interest expense, taxes and net gain or loss on extinguishment of debt. The Company defines Adjusted EBITDA as EBITDA excluding the impact of acquisition related costs. See the “Non-GAAP Measures” and “EBITDA Reconciliation” sections below for more information.

BUSINESS UPDATE

Sterling continued to successfully execute on a multi-year strategic business transformation during 2021. The management team remains focused on accelerating the business through an improved business mix, targeted margin expansion through high-growth vertical acquisitions, and through increased exposure within complementary adjacent markets, including two acquisitions in December.

Segment realignment. With the December 30, 2021 acquisition of Petillo, Sterling realigned its operating groups to reflect management’s present oversight of operations. After realignment, Sterling’s operations consist of three reportable segments: Transportation Solutions, E-Infrastructure Solutions and Building Solutions, with the commercial business reclassified from the previously reported Specialty Services operating group into the newly formed Building Solutions operating group. We incur expenses at the corporate level that relate to our business as a whole. Certain of these amounts have been charged to our business segments by various methods, largely on the basis of usage, with the unallocated remainder reported in the “Corporate” line.

Solidify the base. Since 2016, Sterling has improved bid discipline to reduce the likelihood of underperforming project margins. As a result of this key risk reduction objective, heavy highway backlog gross margin has improved to 9.5% as of December 31, 2021, up from 4% prior to 2016. The Company expects gross margins to continue improving, reflecting the improved mix of work.

Grow high margin products. During the last five years, Sterling’s project mix shifted from low-bid heavy highway projects to alternative delivery projects and other higher margin work. This shift has resulted in low-bid heavy highway revenue reducing from 79% of total revenue in 2016 to 19% as of December 31, 2021.

Expansion into adjacent markets. Sterling is committed to a programmatic acquisition strategy; one that creates new platforms within higher-margin, specialty end markets that serve to broaden its portfolio of products, services and customers. Sterling has pursued platform acquisitions which are accretive to our financial results and with gross margin profiles at or above 15%. Since 2017, the Company has created its E-Infrastructure Solutions and Building Solutions segments with the significant acquisitions of Plateau, Petillo and Tealstone. A higher-value business mix, together with disciplined expense management, positions Sterling as one of the largest specialty site development companies in the Northeastern and Mid-Atlantic U.S.

The Company Provides Full Year 2022 Revenue and Net Income Guidance:

• Revenue of $1.825 billion to $1.875 billion
• Net Income of $83 million to $89 million
• EPS of $2.69 to $2.88
• EBITDA of $185 million to $200 million

CEO Remarks and Outlook

“Throughout 2021, we continued to execute our multi-year strategic business transformation that prioritizes profitable growth, higher-margins and reduced risk. We closed the year with solid fourth quarter results despite the ongoing supply-chain challenges. Our E-Infrastructure and Building Solutions represented 51% of revenue and 86% of our segment operating income in the fourth quarter, consistent with our focus on developing a higher-margin sales mix within our highest growing markets. We announced new E-Infrastructure project awards for both Plateau and Petillo, bringing our total E-Infrastructure Solutions backlog to $433 million,” stated Joe Cutillo, Sterling’s Chief Executive Officer.

“Full year revenues of $1.58 billion exceeded our initial and our third quarter updated guidance and were up 10.8% from the prior year. Our E-Infrastructure Solutions segment accounted for 30% of revenues, up from 28%, our Building Solutions segment represented 20%, up from 19% in the prior year, and our Transportation Solutions segment contributed 50% of revenues, compared with 53% in the prior year,” continued Mr. Cutillo.

“During 2021 Sterling generated $152 million in cash flows from operations, an increase of 25% versus prior year. This allowed us the flexibility to pay down $48 million of debt, invest $43 million in net capital expenditures, and fund part of the Petillo and Kimes acquisitions. Our focus on paying down our debt enabled us to significantly reduce our interest expense, which totaled $19 million for the year, compared with $29 million during the prior year.”

Mr. Cutillo concluded, “Entering 2022, we remain highly optimistic on the outlook for our business as we look out over the next year, driven by a combination of market share gains and accelerating demand across our higher margin markets. We view the continued investment in new data centers and e-commerce distribution centers as a benefit to our E-Infrastructure Solutions segment. Our Building Solutions segment’s expansion into new markets is a direct result of the demand from our customers needing our services in new markets. In our Transportation Solutions segment we remain disciplined in our shift to alternative delivery and design build heavy highway and aviation projects, and focus on margin improvement opportunities with the recently released federal infrastructure programs. Taken all together, we anticipate another year of strong financial performance in 2022 driven by the continued execution of our strategic vision.”

Conference Call

Sterling’s management will hold a conference call to discuss these results and recent corporate developments on Tuesday, March 1, 2022 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 Transportation, E-Infrastructure and Building Solutions in the United States (the “U.S.”), primarily across the Southern, Northeastern and Mid-Atlantic U.S., the Rocky Mountain States, California and Hawaii, as well as other areas with strategic construction opportunities. Transportation Solutions includes infrastructure and rehabilitation projects for highways, roads, bridges, airports, ports, light rail, water, wastewater and storm drainage systems. E-Infrastructure Solutions projects develop advanced, large-scale site development systems and services for data centers, e-commerce distribution centers, warehousing, transportation, energy and more. Building Solutions projects include residential and commercial concrete foundations for single-family and multi-family homes, parking structures, elevated slabs and other concrete work. 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

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 may 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 and 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 Non-GAAP financial measures to the most comparable GAAP measures are provided in the tables included within 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: our business strategy; our financial strategy; our industry outlook; 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 and elsewhere in those filings. Additional factors or risks that we currently deem immaterial, that are not presently known to us or that arise in the future could also cause our actual results to differ materially from our expected results. Given these uncertainties, investors are cautioned that many of the assumptions upon which our forward-looking statements are based are likely to change after the date the forward-looking statements are made. 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.

STERLING CONSTRUCTION COMPANY, INC. & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
		Three Months Ended December 31,								Twelve Months Ended December 31,
		2021				2020				2021				2020
Revenues		$	401,335			$	347,228			$	1,581,766			$	1,427,412
Cost of revenues			(345,661	)			(300,619	)			(1,367,009	)			(1,236,043	)
Gross profit			55,674				46,609				214,757				191,369
General and administrative expense			(25,941	)			(20,206	)			(78,506	)			(71,415	)
Intangible asset amortization			(2,866	)			(2,867	)			(11,464	)			(11,436	)
Acquisition related costs			(3,877	)			(13	)			(3,877	)			(1,026	)
Other operating expense, net			(3,209	)			(2,611	)			(13,623	)			(12,600	)
Operating income			19,781				20,912				107,287				94,892
Interest income			13				15				52				161
Interest expense			(3,688	)			(6,840	)			(19,348	)			(29,377	)
Gain (loss) on extinguishment of debt, net			—				(301	)			2,032				(301	)
Income before income taxes			16,106				13,786				90,023				65,375
Income tax expense			(4,625	)			(7,759	)			(24,900	)			(22,471	)
Net income			11,481				6,027				65,123				42,904
Less: Net income attributable to noncontrolling interests			(573	)			(203	)			(2,478	)			(598	)
Net income attributable to Sterling common stockholders		$	10,908			$	5,824			$	62,645			$	42,306
Net income per share attributable to Sterling common stockholders:
Basic		$	0.38			$	0.21			$	2.19			$	1.52
Diluted		$	0.37			$	0.20			$	2.15			$	1.50
Weighted average common shares outstanding:
Basic			28,818				28,043				28,600				27,859
Diluted			29,756				29,019				29,101				28,195

STERLING CONSTRUCTION COMPANY, INC. & SUBSIDIARIES
SEGMENT INFORMATION
(In thousands)
(Unaudited)
		Three Months Ended December 31,												Twelve Months Ended December 31,
		2021				% of Revenues		2020				% of Revenues		2021				% of Revenues		2020				% of Revenues
Revenues
Transportation Solutions		$	195,477			48%		$	176,683			51%		$	795,582			50%		$	753,824			53%
E-Infrastructure Solutions			127,183			32%			100,408			29%			468,784			30%			397,253			28%
Building Solutions			78,675			20%			70,137			20%			317,400			20%			276,335			19%
Total Revenues		$	401,335					$	347,228					$	1,581,766					$	1,427,412
Operating Income
Transportation Solutions		$	4,718			2.4%		$	3,791			2.1%		$	21,514			2.7%		$	14,439			1.9%
E-Infrastructure Solutions			18,734			14.7%			16,903			16.8%			80,478			17.2%			76,522			19.3%
Building Solutions			9,175			11.7%			6,366			9.1%			32,564			10.3%			30,441			11.0%
Segment Operating Income			32,627			8.1%			27,060			7.8%			134,556			8.5%			121,402			8.5%
Corporate			(8,969	)					(6,135	)					(23,392	)					(25,484	)
Acquisition related costs			(3,877	)					(13	)					(3,877	)					(1,026	)
Total Operating Income		$	19,781			4.9%		$	20,912			6.0%		$	107,287			6.8%		$	94,892			6.6%

STERLING CONSTRUCTION COMPANY, INC. & SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
(Unaudited)
		December 31, 2021				December 31, 2020
Assets
Current assets:
Cash and cash equivalents		$	81,840			$	66,185
Accounts receivable			232,153				177,424
Contract assets			83,310				84,975
Receivables from and equity in construction joint ventures			16,896				16,653
Other current assets			20,492				16,306
Total current assets			434,691				361,543
Property and equipment, net			204,316				126,668
Operating lease right-of-use assets, net			24,520				16,515
Goodwill			259,791				192,014
Other intangibles, net			303,223				244,887
Other non-current assets, net			4,455				11,067
Total assets		$	1,230,996			$	952,694
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable		$	144,982			$	95,201
Contract liabilities			127,932				114,019
Current maturities of long-term debt			28,230				77,434
Current portion of long-term lease obligations			8,841				7,588
Accrued compensation			22,803				18,013
Other current liabilities			18,972				9,629
Total current liabilities			351,760				321,884
Long-term debt			428,588				291,249
Long-term lease obligations			15,831				8,958
Members’ interest subject to mandatory redemption and undistributed earnings			55,115				51,290
Deferred tax liability, net			14,656				—
Other long-term liabilities			4,819				10,584
Total liabilities			870,769				683,965
Stockholders’ equity:
Common stock			298				283
Additional paid in capital			280,274				256,423
Treasury stock			—				(1,445	)
Retained earnings			79,918				17,273
Accumulated other comprehensive loss			(1,723	)			(5,264	)
Total Sterling stockholders’ equity			358,767				267,270
Noncontrolling interests			1,460				1,459
Total stockholders’ equity			360,227				268,729
Total liabilities and stockholders’ equity		$	1,230,996			$	952,694

STERLING CONSTRUCTION COMPANY, INC. & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
		Twelve Months Ended December 31,
		2021				2020
Cash flows from operating activities:
Net income		$	65,123			$	42,904
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			34,201				32,785
Amortization of debt issuance costs and non-cash interest			2,242				3,193
Gain on disposal of property and equipment			(1,396	)			(1,495	)
(Gain) loss on debt extinguishment			(2,032	)			301
Deferred taxes			21,428				19,439
Stock-based compensation expense			11,771				11,643
Change in fair value of interest rate swap			(32	)			265
Changes in operating assets and liabilities			20,289				11,876
Net cash provided by operating activities			151,594				120,911
Cash flows from investing activities:
Acquisitions, net of cash acquired			(180,911	)			—
Capital expenditures			(46,651	)			(32,864	)
Proceeds from sale of property and equipment			4,113				2,373
Net cash used in investing activities			(223,449	)			(30,491	)
Cash flows from financing activities:
Cash received from credit facility			140,000				—
Repayments of debt			(48,273	)			(77,745	)
Distributions to noncontrolling interest owners			(2,477	)			(432	)
Debt issuance costs			(1,340	)			—
Other			(4	)			9,837
Net cash provided by (used in) financing activities			87,906				(68,340	)
Net change in cash, cash equivalents, and restricted cash			16,051				22,080
Cash, cash equivalents, and restricted cash at beginning of period			72,642				50,562
Cash, cash equivalents, and restricted cash at end of period			88,693				72,642
Less: restricted cash (Other current assets)			(6,853	)			(6,457	)
Cash and cash equivalents at end of period		$	81,840			$	66,185

STERLING CONSTRUCTION COMPANY, INC. & SUBSIDIARIES
HISTORICAL QUARTERLY SEGMENT INFORMATION
(In thousands)
(Unaudited)
With the December 30, 2021 acquisition of Petillo, the Company realigned its operating groups to reflect management’s present oversight of operations. After realignment, the Company’s operations consist of three reportable segments: Transportation Solutions, E-Infrastructure Solutions and Building Solutions, with the commercial business reclassified from the previously reported Specialty Services operating group into the newly formed Building Solutions operating group. Additionally, costs attributable to corporate operations are now reported on the “Corporate” line. The following tables present our 2021 and 2020 quarterly revenue and income from operations adjusted to reflect our operating group realignment and to conform to our 2021 presentation:
		2021 Quarters Ended
		March 31				June 30				September 30				December 31				Total
Revenues
Transportation Solutions		$	147,054			$	203,153			$	249,898			$	195,477			$	795,582
E-Infrastructure Solutions			96,572				123,743				121,286				127,183				468,784
Building Solutions			71,690				74,770				92,265				78,675				317,400
Total Revenues		$	315,316			$	401,666			$	463,449			$	401,335			$	1,581,766
Operating Income
Transportation Solutions		$	2,666			$	4,796			$	9,334			$	4,718			$	21,514
E-Infrastructure Solutions			17,812				24,714				19,218				18,734				80,478
Building Solutions			7,361				6,790				9,238				9,175				32,564
Segment Operating Income			27,839				36,300				37,790				32,627				134,556
Corporate			(5,084	)			(3,580	)			(5,759	)			(8,969	)			(23,392	)
Acquisition related costs			—				—				—				(3,877	)			(3,877	)
Total Operating Income		$	22,755			$	32,720			$	32,031			$	19,781			$	107,287

		2020 Quarters Ended
		March 31				June 30				September 30				December 31				Total
Revenues
Transportation Solutions		$	153,286			$	222,777			$	201,078			$	176,683			$	753,824
E-Infrastructure Solutions			78,574				103,310				114,961				100,408				397,253
Building Solutions			64,828				73,951				67,419				70,137				276,335
Total Revenues		$	296,688			$	400,038			$	383,458			$	347,228			$	1,427,412
Operating Income (Loss)
Transportation Solutions		$	(1,285	)		$	7,263			$	4,670			$	3,791			$	14,439
E-Infrastructure Solutions			13,630				23,573				22,416				16,903				76,522
Building Solutions			7,438				8,950				7,687				6,366				30,441
Segment Operating Income			19,783				39,786				34,773				27,060				121,402
Corporate			(7,207	)			(6,601	)			(5,541	)			(6,135	)			(25,484	)
Acquisition related costs			(473	)			(139	)			(401	)			(13	)			(1,026	)
Total Operating Income		$	12,103			$	33,046			$	28,831			$	20,912			$	94,892

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, 2021
		As Reported (GAAP)				Adjustment				Adjusted (Non-GAAP)
Revenues		$	401,335			$	—			$	401,335
Cost of revenues			(345,661	)			—				(345,661	)
Gross profit			55,674				—				55,674
General and administrative expense			(25,941	)			—				(25,941	)
Intangible asset amortization			(2,866	)			—				(2,866	)
Acquisition related costs			(3,877	)			3,877				—
Other operating expense, net			(3,209	)			—				(3,209	)
Operating income			19,781				3,877				23,658
Interest income			13				—				13
Interest expense			(3,688	)			—				(3,688	)
Income before income taxes			16,106				3,877				19,983
Income tax expense			(4,625	)			(930	)			(5,555	)
Net income			11,481				2,947				14,428
Less: Net income attributable to noncontrolling interests			(573	)			—				(573	)
Net income attributable to Sterling common stockholders		$	10,908			$	2,947			$	13,855
Net income per share attributable to Sterling common stockholders:
Basic		$	0.38			$	0.10			$	0.48
Diluted		$	0.37			$	0.10			$	0.47
Weighted average common shares outstanding:
Basic			28,818								28,818
Diluted			29,756								29,756
(1) The summary unaudited adjusted financial data is presented excluding the costs of acquiring Petillo and Kimes, 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, 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 integrating 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, 2021
		As Reported (GAAP)				Adjustment				Adjusted (Non-GAAP)
Revenues		$	1,581,766			$	—			$	1,581,766
Cost of revenues			(1,367,009	)			—				(1,367,009	)
Gross profit			214,757				—				214,757
General and administrative expense			(78,506	)			—				(78,506	)
Intangible asset amortization			(11,464	)			—				(11,464	)
Acquisition related costs			(3,877	)			3,877				—
Other operating expense, net			(13,623	)			—				(13,623	)
Operating income			107,287				3,877				111,164
Interest income			52				—				52
Interest expense			(19,348	)			—				(19,348	)
Gain on extinguishment of debt			2,032				—				2,032
Income before income taxes			90,023				3,877				93,900
Income tax expense			(24,900	)			(930	)			(25,830	)
Net income			65,123				2,947				68,070
Less: Net income attributable to noncontrolling interests			(2,478	)			—				(2,478	)
Net income attributable to Sterling common stockholders		$	62,645			$	2,947			$	65,592
Net income per share attributable to Sterling common stockholders:
Basic		$	2.19			$	0.10			$	2.29
Diluted		$	2.15			$	0.10			$	2.25
Weighted average common shares outstanding:
Basic			28,600								28,600
Diluted			29,101								29,101
(1) The summary unaudited adjusted financial data is presented excluding the costs of acquiring Petillo and Kimes, 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, 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 integrating 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
EBITDA RECONCILIATION
(In thousands)
(Unaudited)
		Three Months Ended December 31,						Twelve Months Ended December 31,
		2021			2020			2021				2020
Net income attributable to Sterling common stockholders		$	10,908		$	5,824		$	62,645			$	42,306
Depreciation and amortization			8,865			8,146			34,201				32,785
Interest expense, net of interest income			3,675			6,825			19,296				29,216
Income tax expense			4,625			7,759			24,900				22,471
(Gain) loss on extinguishment of debt, net			—			301			(2,032	)			301
EBITDA (1)		$	28,073		$	28,855		$	139,010			$	127,079
Acquisition related costs			3,877			13			3,877				1,026
Adjusted EBITDA (2)		$	31,950		$	28,868		$	142,887			$	128,105
(1) The Company defines EBITDA as GAAP net income attributable to Sterling common stockholders, adjusted for depreciation and amortization, net interest expense, taxes, and net gain or 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/20220228006070/en/

Sterling Construction Company, Inc.

Ron Ballschmiede, Chief Financial Officer

281-214-0777

Investor Relations:

The Equity Group Inc.

Jeremy Hellman, CFA

212-836-9626

Source: Sterling Construction Company, Inc.

FAQ

What were Sterling Construction's Q4 2021 financial results?

Sterling reported Q4 2021 revenue of $401.3 million, net income of $10.9 million, and an EPS of $0.37.

How did Sterling's full-year 2021 performance compare to 2020?

For full-year 2021, Sterling's revenue was $1.58 billion, a 10.8% increase from 2020, with net income rising to $62.6 million.

What is Sterling's backlog as of December 31, 2021?

Sterling's backlog reached $1.49 billion, a 27% increase from the previous year.

What is the revenue guidance for Sterling in 2022?

Sterling provided 2022 revenue guidance of $1.825 billion to $1.875 billion.

What challenges did Sterling face in Q4 2021?

Sterling experienced ongoing supply chain and inflation challenges that impacted gross margins.