Sterling Reports Second Quarter 2023 Record Results
- Revenues increased by 13.1% in Q2 2023
- Net income increased by 40% to $39.5 million
- EBITDA increased by 29% to $73.5 million
- Backlog increased by 23% to $1.74 billion
- Full year 2023 guidance increased
- None.
Increases 2023 Full Year Guidance
The financial information herein is from continuing operations and comparisons are to the prior year quarter, unless otherwise noted.
Second Quarter 2023 Results
-
Revenues of
, an increase of$522.3 million 13.1% -
Gross margin of
17.7% , an increase from15.4% -
Net Income of
, or$39.5 million per diluted share, an increase of$1.27 40% and37% , respectively -
EBITDA(1) of
, an increase of$73.5 million 29% -
Cash flows from operations totaled
for the six months ended June 30, 2023$181.1 million -
Cash and Cash Equivalents totaled
at June 30, 2023$278.1 million -
Backlog at June 30, 2023 was
, an increase of$1.74 billion 23% over December 31, 2022 -
Combined backlog(2) at June 30, 2023 was
, an increase of$2.39 billion 42% over December 31, 2022
(1) The Company defines EBITDA as GAAP net income from Continuing Operations, adjusted for depreciation and amortization, net interest expense and taxes. The Company defines Adjusted EBITDA as EBITDA excluding acquisition related costs. See the “Non-GAAP Measures” and “EBITDA Reconciliation” sections below for more information.
(2) Combined Backlog includes Unsigned Awards of
CEO Remarks and Outlook
“Our outstanding results in the second quarter reflect a combination of strong customer demand and excellent execution by our teams. While we are very pleased with our
“Each of our segments saw revenue growth and operating margin expansion in the second quarter. E-Infrastructure Solutions grew revenue by
“Our relentless focus on strategic execution is driving earnings growth and cash generation, which in turn strengthens our ability to pursue new opportunities for profitable, long-term growth. Our strong second quarter results, record backlog and favorable opportunities across our markets give us confidence in our ability to deliver revenue and profitability growth for the year. In light of our results to date, we are increasing our full year guidance. The mid-point of our guidance ranges would offer an improvement in revenue by
Full Year 2023 Guidance
-
Revenue of
to$1.95 billion $2.05 billion -
Net Income of
to$125 million $131 million -
EPS of
to$4.00 $4.20 -
EBITDA(1) of
to$250 million $260 million
(1) The Company defines EBITDA as GAAP net income attributable to Sterling’s common stockholders, adjusted for depreciation and amortization, net interest expense and taxes. See the “Non-GAAP Measures” and “EBITDA Reconciliation” sections below for more information.
Conference Call
Sterling’s management will hold a conference call to discuss these results and recent corporate developments on Tuesday, August 8, 2023 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 10 minutes before the conference call is scheduled to begin and ask for the Sterling Infrastructure call. To coincide with the conference call, Sterling will post a slide presentation at www.strlco.com on the Events & Presentations 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 15 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 30 days.
About Sterling
Sterling operates through a variety of subsidiaries within three segments specializing in E-Infrastructure, Transportation and Building Solutions in
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 contains “Non-GAAP” financial measures as defined under Regulation G of the amended
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; our guidance; 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,” “would,” “should,” “expect,” “plan,” “project,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “pursue,” “target,” “guidance,” “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
STERLING INFRASTRUCTURE, INC. & SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited) |
||||||||||||||||
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|||||||||||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|||||||||
Continuing Operations: |
|
|
|
|
|
|
|
|||||||||
Revenues |
$ |
522,325 |
|
|
$ |
461,827 |
|
|
$ |
925,904 |
|
|
$ |
827,789 |
|
|
Cost of revenues |
|
(430,051 |
) |
|
|
(390,819 |
) |
|
|
(771,888 |
) |
|
|
(701,632 |
) |
|
Gross profit |
|
92,274 |
|
|
|
71,008 |
|
|
|
154,016 |
|
|
|
126,157 |
|
|
General and administrative expense |
|
(24,034 |
) |
|
|
(20,844 |
) |
|
|
(47,355 |
) |
|
|
(41,141 |
) |
|
Intangible asset amortization |
|
(3,737 |
) |
|
|
(3,514 |
) |
|
|
(7,473 |
) |
|
|
(7,082 |
) |
|
Acquisition related costs |
|
(59 |
) |
|
|
(230 |
) |
|
|
(249 |
) |
|
|
(485 |
) |
|
Other operating expense, net |
|
(4,181 |
) |
|
|
(2,431 |
) |
|
|
(6,049 |
) |
|
|
(4,097 |
) |
|
Operating income |
|
60,263 |
|
|
|
43,989 |
|
|
|
92,890 |
|
|
|
73,352 |
|
|
Interest income |
|
2,203 |
|
|
|
28 |
|
|
|
4,177 |
|
|
|
36 |
|
|
Interest expense |
|
(7,731 |
) |
|
|
(4,477 |
) |
|
|
(15,259 |
) |
|
|
(9,127 |
) |
|
Income before income taxes |
|
54,735 |
|
|
|
39,540 |
|
|
|
81,808 |
|
|
|
64,261 |
|
|
Income tax expense |
|
(14,505 |
) |
|
|
(11,015 |
) |
|
|
(21,538 |
) |
|
|
(17,793 |
) |
|
Net income, including noncontrolling interests |
|
40,230 |
|
|
|
28,525 |
|
|
|
60,270 |
|
|
|
46,468 |
|
|
Less: Net income attributable to noncontrolling interests |
|
(750 |
) |
|
|
(411 |
) |
|
|
(1,141 |
) |
|
|
(682 |
) |
|
Net income from Continuing Operations |
$ |
39,480 |
|
|
$ |
28,114 |
|
|
$ |
59,129 |
|
|
$ |
45,786 |
|
|
|
|
|
|
|
|
|
|
|||||||||
Discontinued Operations: |
|
|
|
|
|
|
|
|||||||||
Pretax loss |
|
— |
|
|
|
(2,900 |
) |
|
$ |
— |
|
|
$ |
(1,501 |
) |
|
Income tax benefit |
|
— |
|
|
|
747 |
|
|
|
— |
|
|
|
928 |
|
|
Net loss from Discontinued Operations |
$ |
— |
|
|
$ |
(2,153 |
) |
|
$ |
— |
|
|
$ |
(573 |
) |
|
|
|
|
|
|
|
|
|
|||||||||
Net income attributable to Sterling common stockholders |
$ |
39,480 |
|
|
$ |
25,961 |
|
|
$ |
59,129 |
|
|
$ |
45,213 |
|
|
|
|
|
|
|
|
|
|
|||||||||
Net income per share from Continuing Operations: |
|
|
|
|
|
|
|
|||||||||
Basic |
$ |
1.28 |
|
|
$ |
0.93 |
|
|
$ |
1.93 |
|
|
$ |
1.52 |
|
|
Diluted |
$ |
1.27 |
|
|
$ |
0.93 |
|
|
$ |
1.91 |
|
|
$ |
1.52 |
|
|
|
|
|
|
|
|
|
|
|||||||||
Net loss per share from Discontinued Operations: |
|
|
|
|
|
|
|
|||||||||
Basic |
$ |
— |
|
|
$ |
(0.07 |
) |
|
$ |
— |
|
|
$ |
(0.02 |
) |
|
Diluted |
$ |
— |
|
|
$ |
(0.07 |
) |
|
$ |
— |
|
|
$ |
(0.02 |
) |
|
|
|
|
|
|
|
|
|
|||||||||
Net income per share attributable to Sterling common stockholders: |
|
|
|
|
|
|
|
|||||||||
Basic |
$ |
1.28 |
|
|
$ |
0.86 |
|
|
$ |
1.93 |
|
|
$ |
1.50 |
|
|
Diluted |
$ |
1.27 |
|
|
$ |
0.86 |
|
|
$ |
1.91 |
|
|
$ |
1.50 |
|
|
|
|
|
|
|
|
|
|
|||||||||
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
|||||||||
Basic |
|
30,780 |
|
|
|
30,225 |
|
|
|
30,699 |
|
|
|
30,094 |
|
|
Diluted |
|
31,000 |
|
|
|
30,362 |
|
|
|
30,886 |
|
|
|
30,229 |
|
|
STERLING INFRASTRUCTURE, INC. & SUBSIDIARIES SEGMENT INFORMATION (In thousands) (Unaudited) |
||||||||||||||||||||||||
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|||||||||||||||||||||
Revenues |
2023 |
|
% of Revenue |
|
2022 |
|
% of Revenue |
|
2023 |
|
% of Revenue |
|
2022 |
|
% of Revenue |
|||||||||
E-Infrastructure Solutions |
$ |
260,148 |
|
|
|
|
$ |
233,548 |
|
|
|
|
$ |
465,988 |
|
|
|
|
$ |
402,475 |
|
|
|
|
Transportation Solutions |
|
151,088 |
|
|
|
|
|
142,640 |
|
|
|
|
|
262,227 |
|
|
|
|
|
258,781 |
|
|
|
|
Building Solutions |
|
111,089 |
|
|
|
|
|
85,639 |
|
|
|
|
|
197,689 |
|
|
|
|
|
166,533 |
|
|
|
|
Total Revenues |
$ |
522,325 |
|
|
|
|
$ |
461,827 |
|
|
|
|
$ |
925,904 |
|
|
|
|
$ |
827,789 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Operating Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
E-Infrastructure Solutions |
$ |
43,167 |
|
|
|
|
$ |
32,824 |
|
|
|
|
$ |
67,436 |
|
|
|
|
$ |
54,109 |
|
|
|
|
Transportation Solutions |
|
9,856 |
|
|
|
|
|
7,410 |
|
|
|
|
|
15,162 |
|
|
|
|
|
11,853 |
|
|
|
|
Building Solutions |
|
13,480 |
|
|
|
|
|
9,751 |
|
|
|
|
|
22,181 |
|
|
|
|
|
19,109 |
|
|
|
|
Segment Operating Income |
|
66,503 |
|
|
|
|
|
49,985 |
|
|
|
|
|
104,779 |
|
|
|
|
|
85,071 |
|
|
|
|
Corporate General and Administrative Expense |
|
(6,181 |
) |
|
|
|
|
(5,766 |
) |
|
|
|
|
(11,640 |
) |
|
|
|
|
(11,234 |
) |
|
|
|
Acquisition Related Costs |
|
(59 |
) |
|
|
|
|
(230 |
) |
|
|
|
|
(249 |
) |
|
|
|
|
(485 |
) |
|
|
|
Total Operating Income |
$ |
60,263 |
|
|
|
|
$ |
43,989 |
|
|
|
|
$ |
92,890 |
|
|
|
|
$ |
73,352 |
|
|
|
|
STERLING INFRASTRUCTURE, INC. & SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except per share data) (Unaudited) |
||||||
|
June 30, 2023 |
|
December 31, 2022 |
|||
Assets |
|
|
|
|||
Current assets: |
|
|
|
|||
Cash and cash equivalents |
$ |
278,121 |
|
$ |
181,544 |
|
Accounts receivable |
|
296,496 |
|
|
262,646 |
|
Contract assets |
|
115,011 |
|
|
109,803 |
|
Receivables from and equity in construction joint ventures |
|
11,407 |
|
|
14,122 |
|
Other current assets |
|
14,765 |
|
|
29,139 |
|
Total current assets |
|
715,800 |
|
|
597,254 |
|
Property and equipment, net |
|
228,461 |
|
|
215,482 |
|
Operating lease right-of-use assets, net |
|
61,106 |
|
|
59,415 |
|
Goodwill |
|
262,692 |
|
|
262,692 |
|
Other intangibles, net |
|
291,650 |
|
|
299,123 |
|
Other non-current assets, net |
|
7,649 |
|
|
7,654 |
|
Total assets |
$ |
1,567,358 |
|
$ |
1,441,620 |
|
Liabilities and Stockholders’ Equity |
|
|
|
|||
Current liabilities: |
|
|
|
|||
Accounts payable |
$ |
140,620 |
|
$ |
121,887 |
|
Contract liabilities |
|
335,877 |
|
|
239,297 |
|
Current maturities of long-term debt |
|
35,062 |
|
|
32,610 |
|
Current portion of long-term lease obligations |
|
18,129 |
|
|
19,715 |
|
Accrued compensation |
|
25,335 |
|
|
24,136 |
|
Other current liabilities |
|
12,742 |
|
|
8,966 |
|
Total current liabilities |
|
567,765 |
|
|
446,611 |
|
Long-term debt |
|
329,284 |
|
|
398,735 |
|
Long-term lease obligations |
|
43,087 |
|
|
40,103 |
|
Members’ interest subject to mandatory redemption and undistributed earnings |
|
21,296 |
|
|
21,597 |
|
Deferred tax liability, net |
|
58,449 |
|
|
51,659 |
|
Other long-term liabilities |
|
5,563 |
|
|
5,116 |
|
Total liabilities |
|
1,025,444 |
|
|
963,821 |
|
Stockholders’ equity: |
|
|
|
|||
Common stock |
|
308 |
|
|
306 |
|
Additional paid in capital |
|
291,757 |
|
|
287,914 |
|
Retained earnings |
|
245,508 |
|
|
186,379 |
|
Total Sterling stockholders’ equity |
|
537,573 |
|
|
474,599 |
|
Noncontrolling interests |
|
4,341 |
|
|
3,200 |
|
Total stockholders’ equity |
|
541,914 |
|
|
477,799 |
|
Total liabilities and stockholders’ equity |
$ |
1,567,358 |
|
$ |
1,441,620 |
|
STERLING INFRASTRUCTURE, INC. & SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) |
||||||||
|
Six Months Ended June 30, |
|||||||
|
2023 |
|
2022 |
|||||
Cash flows from operating activities: |
|
|
|
|||||
Net income |
$ |
60,270 |
|
|
$ |
45,895 |
|
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|||||
Depreciation and amortization |
|
27,672 |
|
|
|
25,412 |
|
|
Amortization of debt issuance costs and non-cash interest |
|
877 |
|
|
|
1,102 |
|
|
Gain on disposal of property and equipment |
|
(2,631 |
) |
|
|
(716 |
) |
|
Gain on debt extinguishment, net |
|
— |
|
|
|
(2,428 |
) |
|
Deferred taxes |
|
6,790 |
|
|
|
14,505 |
|
|
Stock-based compensation |
|
7,003 |
|
|
|
5,238 |
|
|
Change in fair value of interest rate swap |
|
— |
|
|
|
(173 |
) |
|
Changes in operating assets and liabilities |
|
81,126 |
|
|
|
(46,861 |
) |
|
Net cash provided by operating activities |
|
181,107 |
|
|
|
41,974 |
|
|
Cash flows from investing activities: |
|
|
|
|||||
Acquisitions, net of cash acquired |
|
— |
|
|
|
(3,033 |
) |
|
Disposition proceeds |
|
14,000 |
|
|
|
— |
|
|
Capital expenditures |
|
(38,859 |
) |
|
|
(28,945 |
) |
|
Proceeds from sale of property and equipment |
|
8,525 |
|
|
|
951 |
|
|
Net cash used in investing activities |
|
(16,334 |
) |
|
|
(31,027 |
) |
|
Cash flows from financing activities: |
|
|
|
|||||
Repayments of debt |
|
(67,589 |
) |
|
|
(11,770 |
) |
|
Withholding taxes paid on net share settlement of equity awards |
|
(4,328 |
) |
|
|
(7,385 |
) |
|
Net cash used in financing activities |
|
(71,917 |
) |
|
|
(19,155 |
) |
|
Net change in cash, cash equivalents, and restricted cash |
|
92,856 |
|
|
|
(8,208 |
) |
|
Cash, cash equivalents and restricted cash at beginning of period |
|
185,265 |
|
|
|
88,693 |
|
|
Cash, cash equivalents and restricted cash at end of period |
|
278,121 |
|
|
|
80,485 |
|
|
Less: restricted cash - Continuing Operations |
|
— |
|
|
|
(3,721 |
) |
|
Less: cash, cash equivalents and restricted cash - Discontinued Operations |
|
— |
|
|
|
(14,687 |
) |
|
Cash and cash equivalents at end of period - Continuing Operations |
$ |
278,121 |
|
|
$ |
62,077 |
|
|
STERLING INFRASTRUCTURE, INC. & SUBSIDIARIES EBITDA FROM CONTINUING OPERATIONS RECONCILIATION (In thousands) (Unaudited) |
||||||||||||
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|||||||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|||||
Net income from Continuing Operations |
$ |
39,480 |
|
$ |
28,114 |
|
$ |
59,129 |
|
$ |
45,786 |
|
Depreciation and amortization |
|
13,980 |
|
|
13,231 |
|
|
27,672 |
|
|
24,594 |
|
Interest expense, net of interest income |
|
5,528 |
|
|
4,449 |
|
|
11,082 |
|
|
9,091 |
|
Income tax expense |
|
14,505 |
|
|
11,015 |
|
|
21,538 |
|
|
17,793 |
|
EBITDA from Continuing Operations (1) |
|
73,493 |
|
|
56,809 |
|
|
119,421 |
|
|
97,264 |
|
Acquisition related costs |
|
59 |
|
|
230 |
|
|
249 |
|
|
485 |
|
Adjusted EBITDA from Continuing Operations (2) |
$ |
73,552 |
|
$ |
57,039 |
|
$ |
119,670 |
|
$ |
97,749 |
(1) |
The Company defines EBITDA as GAAP net income from Continuing Operations, adjusted for depreciation and amortization, net interest expense and taxes. |
||||||||
(2) |
The Company defines Adjusted EBITDA as EBITDA excluding the impact of acquisition related costs. |
||||||||
STERLING INFRASTRUCTURE, INC. & SUBSIDIARIES
EBITDA GUIDANCE RECONCILIATION (In millions) (Unaudited) |
||||||
|
Full Year 2023 Guidance |
|||||
|
Low |
|
High |
|||
Net income attributable to Sterling common stockholders |
$ |
125 |
|
$ |
131 |
|
Depreciation and amortization |
|
56 |
|
|
57 |
|
Interest expense, net of interest income |
|
22 |
|
|
23 |
|
Income tax expense |
|
47 |
|
|
49 |
|
EBITDA (1) |
$ |
250 |
|
$ |
260 |
(1) |
The Company defines EBITDA as GAAP net income attributable to Sterling common stockholders, adjusted for depreciation and amortization, net interest expense, and taxes. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20230807535233/en/
Company Contact:
Sterling Infrastructure, Inc.
Noelle Dilts, VP IR and Corporate Strategy
281-214-0795
Investor Relations Contact:
The Equity Group Inc.
Jeremy Hellman, CFA
212-836-9626
Source: Sterling Infrastructure, Inc.