8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 3, 2020

STERLING CONSTRUCTION COMPANY, INC.
(Exact name of registrant as specified in its charter)
Delaware	001-31993	25-1655321
(State or other jurisdiction of incorporation<br>or organization)	(Commission File Number)	(I.R.S. Employer<br>Identification No.)
1800 Hughes Landing Blvd.<br><br>The Woodlands, Texas		77380
(Address of principal executive offices)		(Zip Code)
Registrant’s telephone number, including area code:  (281) 214-0800				Securities registered pursuant to Section 12(b) of the Act:
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Common Stock, $0.01 par value per share	STRL	The NASDAQ Stock Market LLC
(Title of Class)	(Trading Symbol)	(Name of each exchange on which registered)		Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):
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☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))		Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR § 240.12b-2 of this chapter).
---	---
Emerging growth company	☐		If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.	¨
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Item 2.02 Results of Operations and Financial Condition.

On August 3, 2020, Sterling Construction Company, Inc. (the “Company") issued a press release announcing financial results for the three and six months ended June 30, 2020 and an update of 2020 guidance. The copy of the press release is being furnished with this Current Report on Form 8-K as Exhibit 99.1 and is incorporated herein by reference.

The information provided in this Item 2.02 shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, unless the registrant specifically states that the information is to be considered “filed” under the Exchange Act nor shall it be incorporated by reference in any filing made by the Company pursuant to the Exchange Act or the Securities Act of 1933, as amended, other than to the extent that such filing incorporates by reference any or all of such information by express reference thereto.

Item 7.01 Regulation FD Disclosure.

On August 4, 2020, the Company will host a conference call to discuss the second quarter 2020 results as well as corporate developments. The slides used in the conference call are being furnished with this Current Report on Form 8-K as Exhibit 99.2 and are hereby incorporated herein by reference.

The information provided in this Item 7.01 shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, unless the registrant specifically states that the information is to be considered “filed” under the Exchange Act nor shall it be incorporated by reference in any filing made by the Company pursuant to the Exchange Act or the Securities Act of 1933, as amended, other than to the extent that such filing incorporates by reference any or all of such information by express reference thereto.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibit Index

Exhibit Number	Description
99.1	Press release, dated August 3, 2020
99.2	Presentation slides, dated August 4, 2020

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		STERLING CONSTRUCTION COMPANY, INC.
Date:	August 3, 2020	By:	/s/ Ronald A. Ballschmiede
			Ronald A. Ballschmiede
			Chief Financial Officer

Document

Exhibit 99.1

NEWS RELEASE

For Immediate Release:

August 3, 2020

Sterling Reports 2020 Second Quarter Results

Recent Acquisition and Base Business Performance Drive Record Results

Raises Full Year Revenues and Income Outlook

THE WOODLANDS, TX – August 3, 2020 – Sterling Construction Company, Inc. (NasdaqGS: STRL) (“Sterling” or “the Company”) today announced financial results for the second quarter 2020.

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

•Revenues were $400.0 million compared to $264.1 million;

•Gross margin was 14.9% of revenues compared to 9.7%;

•Net Income was $18.3 million compared to $7.8 million;

•EPS was $0.65 compared to $0.29; and,

•EBITDA was $41.2 million compared to $15.3 million.

Consolidated Financial Position and Liquidity:

•Cash and Cash Equivalents were $70.6 million at June 30, 2020 compared to $45.7 million at December 31, 2019;

•Cash flows from operations were $52.3 million for the six months ended June 30, 2020 compared to $(4.3) million for the comparable prior year period;

•Payments of scheduled Term Loan Facility debt and the seller notes totaled $22.5 million for the six months ended June 30, 2020;

•Debt, net of cash totaled $351.4 million at June 30, 2020 compared to $387.4 million at December 31, 2019; and,

•Our $75 million Revolving Credit Facility has $55 million of availability, reflecting a $30 million repayment in the quarter.

Heavy Civil and Specialty Services Backlog Highlights

•Combined Backlog at June 30, 2020 was $1.57 billion, up from $1.34 billion at December 31, 2019. Combined Backlog consists of $1.13 billion of Backlog and $437 million of unsigned contracts as of June 30, 2020 compared to $1.07 billion and $273 million at December 31, 2019, respectively. No residential construction contracts are included in Backlog.

•Total margin in Backlog has increased approximately 140 basis points, from 11.5% at December 31, 2019 to 12.9% at June 30, 2020. Combined Backlog gross margin improved from 11.0% at December 31, 2019 to 11.7% at June 30, 2020.

Full Year Revenue and Income Guidance

•Revenue: $1.415 billion to $1.430 billion.

•Net Income: $41 million to $44 million, excluding acquisition related costs of $1 million to $2 million.

CEO Remarks and Outlook

“I am extremely proud of what our employees were able to accomplish in one of the most challenging times in our Company’s history” stated Joe Cutillo, Sterling’s Chief Executive Officer. “Our bottom-line results were the best ever achieved by the Company, which reflects the benefits of our strategy to transform our business portfolio and our overall project mix towards higher value add, lower risk, and more profitable work. Most importantly, we delivered this performance while maintaining the health and safety of our team across all of our operating geographies, which is a testament to the attentiveness, discipline and professionalism of our nearly 3,000 employees in the face of our nation’s ongoing battle against the COVID-19 pandemic.”

“Our Specialty Services segment, which includes our recent acquisition of Plateau, more than doubled its operating profit relative to the first quarter of 2020. Plateau entered the quarter with record backlog and executed flawlessly for its blue chip customer base. Our Residential segment rebounded from the pandemic-related headwinds of the first quarter, and also solidly outperformed the prior year quarter driven by a faster than anticipated recovery of the Texas housing market and our expansion into the Houston market. Our Heavy Civil business has remained stable as we executed on substantial heavy highway work during the quarter while maintaining our backlog at near record levels. We are yet to see significant project delays or cancellations in the geographies in which we perform heavy civil work and have no reason to anticipate that this will be the case for the foreseeable future. Additionally, as yet, no states in the geographies in which we operate have stopped or reduced project lettings due to funding challenges. In fact, despite the uncertainty and general social and economic disruption caused by the pandemic crisis, we remain optimistic about the outlook for all of our businesses for the balance of the year given our Combined Backlog, the pending new awards we expect to realize in the coming months, and the sizeable quantity of new project opportunities that we’ve identified.”

Mr. Cutillo continued, “In addition to record earnings, we further enhanced our liquidity position in the second quarter. We are comfortable with our capital structure which provides us with the financial flexibility to continue to generate profitable growth. For the first six months of 2020 we generated $52.3 million of operating cash flow, an increase of $56.6 million compared to last year. In addition, we reduced our net debt by $36.0 million during the year. We expect to continue paying down debt over the remainder of 2020, putting us in an increasingly strong financial position going into 2021.”

Mr. Cutillo concluded, “Based on our year-to-date performance, the anticipated contribution from Plateau and our record high Combined Backlog and associated margin, along with our view on market strength and diversification of our business, we are providing updated guidance for 2020. We now expect to generate full year 2020 revenues of between $1.415 billion and $1.430 billion. Our expectation for 2020 net income attributable to Sterling common stockholders is between $41 million to $44 million, excluding acquisition related costs of $1 million to $2 million, representing a 73% increase from adjusted net income in 2019. We expect our full year 2020 diluted average common shares outstanding to be approximately 28.0 million. This guidance assumes no significant increase in COVID-19 pandemic impacts on our operations during the remainder of the year. However, with the continuing volatility of the COVID-19 pandemic, significant incremental pandemic impacts could keep us from achieving our 2020 guidance.”

Conference Call

Sterling’s management will hold a conference call to discuss these results and recent corporate developments on Tuesday, August 4, 2020 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, which includes additional 2020 financial modeling considerations. 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”), a Delaware corporation, is a construction company that has been involved in the construction industry since its founding in 1955. The Company operates through a variety of subsidiaries within three operating groups 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, 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 scope and duration of the COVID-19 pandemic and its continuing impact on national and global economic conditions; and our business strategy; financial strategy; and 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.

Contact:<br><br>Sterling Construction Company, Inc.<br><br>Ron Ballschmiede, Chief Financial Officer<br><br>281-214-0800	Investor Relations Counsel:<br><br>The Equity Group Inc.<br><br>Fred Buonocore, CFA  212-836-9607

STERLING CONSTRUCTION COMPANY, INC. & SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Revenues	$	400,038	$	264,086	$	696,726	$	488,035
Cost of revenues	(340,439)		(238,590)		(601,882)		(443,036)
Gross profit	59,599		25,496		94,844		44,999
General and administrative expense	(18,451)		(10,174)		(36,055)		(22,063)
Intangible asset amortization	(2,866)		(600)		(5,703)		(1,200)
Acquisition related costs	(139)		(262)		(612)		(262)
Other operating expense, net	(5,097)		(3,276)		(7,325)		(5,570)
Operating income	33,046		11,184		45,149		15,904
Interest income	24		291		123		655
Interest expense	(7,557)		(2,904)		(15,360)		(5,964)
Income before income taxes	25,513		8,571		29,912		10,595
Income tax expense	(7,248)		(706)		(8,432)		(869)
Net income	18,265		7,865		21,480		9,726
Less: Net income attributable to noncontrolling interests	(55)		(37)		(155)		(83)
Net income attributable to Sterling common stockholders	$	18,210	$	7,828	$	21,325	$	9,643
Net income per share attributable to Sterling common stockholders:
Basic	$	0.65	$	0.30	$	0.77	$	0.37
Diluted	$	0.65	$	0.29	$	0.76	$	0.36
Weighted average common shares outstanding:
Basic	27,941		26,338		27,794		26,357
Diluted	27,957		26,623		27,887		26,657

STERLING CONSTRUCTION COMPANY, INC. & SUBSIDIARIES

SEGMENT INFORMATION

(In thousands)

(Unaudited)

	Three Months Ended June 30,											Six Months Ended June 30,
	2020		% of<br>Revenue	2019		% of<br>Revenue	2020		% of<br>Revenue	2019		% of<br>Revenue
Revenue
Heavy Civil	$	220,448	55%	$	200,236	75%	$	376,063	53%	$	350,741	72%
Specialty Services	135,703		34%	27,894		11%	240,426		35%	58,573		12%
Residential	43,887		11%	35,956		14%	80,237		12%	78,721		16%
Total Revenue	$	400,038		$	264,086		$	696,726		$	488,035
Operating Income
Heavy Civil	$	3,896	1.8%	$	5,747	2.9%	$	274	0.1%	$	3,600	1.0%
Specialty Services	23,246		17.1%	865		3.1%	34,360		14.3%	1,913		3.3%
Residential	6,043		13.8%	4,834		13.4%	11,127		13.9%	10,653		13.5%
Subtotal	33,185		8.3%	11,446		4.3%	45,761		6.6%	16,166		3.3%
Acquisition related costs	(139)			(262)			(612)			(262)
Total Operating Income	$	33,046	8.3%	$	11,184	4.2%	$	45,149	6.5%	$	15,904	3.3%

STERLING CONSTRUCTION COMPANY, INC. & SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

(Unaudited)

	June 30,<br>2020		December 31,<br>2019
Assets
Current assets:
Cash and cash equivalents	$	70,612	$	45,733
Accounts receivable, including retainage	269,406		248,247
Costs and estimated earnings in excess of billings	52,068		42,555
Receivables from and equity in construction joint ventures	12,396		9,196
Other current assets	11,965		11,790
Total current assets	416,447		357,521
Property and equipment, net	119,596		116,030
Operating lease right-of-use assets	17,076		13,979
Goodwill	192,014		191,892
Other intangibles, net	250,620		256,323
Deferred tax asset, net	21,604		26,012
Other non-current assets, net	153		183
Total assets	$	1,017,510	$	961,940
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	131,098	$	137,593
Billings in excess of costs and estimated earnings	110,934		85,011
Current maturities of long-term debt	54,979		42,473
Current portion of long-term lease obligations	7,423		7,095
Income taxes payable	3,594		1,212
Accrued compensation	19,075		13,727
Other current liabilities	10,589		6,393
Total current liabilities	337,692		293,504
Long-term debt	367,028		390,627
Long-term lease obligations	9,733		6,976
Members’ interest subject to mandatory redemption and undistributed earnings	53,751		49,003
Other long-term liabilities	8,221		619
Total liabilities	776,425		740,729
Stockholders’ equity:
Common stock, par value $0.01 per share; 38,000 shares authorized, 28,280 and 28,290 shares issued, 28,034 and 27,772 shares outstanding	283		283
Additional paid in capital	253,820		251,019
Treasury Stock, at cost: 246 and 518 shares	(3,435)		(6,142)
Retained deficit	(3,708)		(25,033)
Accumulated other comprehensive loss	(7,323)		(209)
Total Sterling stockholders’ equity	239,637		219,918
Noncontrolling interests	1,448		1,293
Total stockholders’ equity	241,085		221,211
Total liabilities and stockholders’ equity	$	1,017,510	$	961,940

STERLING CONSTRUCTION COMPANY, INC. & SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Six Months Ended June 30,
	2020		2019
Cash flows from operating activities:
Net income	$	21,480	$	9,726
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	16,541		8,473
Amortization of debt issuance costs and non-cash interest	1,762		1,602
Gain on disposal of property and equipment	(598)		(441)
Deferred taxes	6,223		761
Stock-based compensation expense	6,196		1,670
Loss on interest rate hedge	272		—
Changes in operating assets and liabilities	385		(26,116)
Net cash provided by (used in) operating activities	52,261		(4,325)
Cash flows from investing activities:
Capital expenditures	(14,574)		(4,854)
Proceeds from sale of property and equipment	769		802
Net cash used in investing activities	(13,805)		(4,052)
Cash flows from financing activities:
Repayments of debt	(22,644)		(5,763)
Distributions to noncontrolling interest owners	—		(5,100)
Purchase of treasury stock	—		(3,201)
Other	9,067		76
Net cash used in financing activities	(13,577)		(13,988)
Net change in cash and cash equivalents	24,879		(22,365)
Cash and cash equivalents at beginning of period	45,733		94,095
Cash and cash equivalents at end of period	$	70,612	$	71,730

STERLING CONSTRUCTION COMPANY, INC. & SUBSIDIARIES

CONDENSED 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.
		Adjustment		Adjusted<br>(Non-GAAP)
Revenues	400,038	$	—	$	400,038
Cost of revenues		—		(340,439)
Gross profit		—		59,599
General and administrative expense		—		(18,451)
Intangible asset amortization				(2,866)
Acquisition related costs		139		—
Other operating expense, net		—		(5,097)
Operating income		139		33,185
Interest income		—		24
Interest expense		—		(7,557)
Income before income taxes		139		25,652
Income tax expense (2)		(39)		(7,287)
Net income		100		18,365
Less: Net income attributable to noncontrolling interests		—		(55)
Net income attributable to Sterling common stockholders	18,210	$	100	$	18,310
Net income per share attributable to Sterling common stockholders:
Basic	0.65	$	0.01	$	0.66
Diluted	0.65	$	—	$	0.65
Weighted average common shares outstanding:
Basic				27,941
Diluted				27,957
(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.
(2) Adjusted Non-GAAP income tax expense of 7,287 includes non-cash federal income tax expense of 5,349.

All values are in US Dollars.

STERLING CONSTRUCTION COMPANY, INC. & SUBSIDIARIES

CONDENSED 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 June 30, 2019
	As Reported (GAAP)		Adjustment		Adjusted<br>(Non-GAAP)
Revenues	$	264,086	$	—	$	264,086
Cost of revenues	(238,590)		—		(238,590)
Gross profit	25,496		—		25,496
General and administrative expense	(10,174)		—		(10,174)
Intangible asset amortization	(600)				(600)
Acquisition related costs	(262)		262		—
Other operating expense, net	(3,276)		—		(3,276)
Operating income	11,184		262		11,446
Interest income	291		—		291
Interest expense	(2,904)		—		(2,904)
Income before income taxes	8,571		262		8,833
Income tax expense	(706)		—		(706)
Net income	7,865		262		8,127
Less: Net income attributable to noncontrolling interests	(37)		—		(37)
Net income attributable to Sterling common stockholders	$	7,828	$	262	$	8,090
Net income per share attributable to Sterling common stockholders:
Basic	$	0.30	$	0.01	$	0.31
Diluted	$	0.29	$	0.01	$	0.30
Weighted average common shares outstanding:
Basic	26,338				26,338
Diluted	26,623				26,623
^(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

CONDENSED 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.
		Adjustment		Adjusted<br>(Non-GAAP)
Revenues	696,726	$	—	$	696,726
Cost of revenues		—		(601,882)
Gross profit		—		94,844
General and administrative expense		—		(36,055)
Intangible asset amortization				(5,703)
Acquisition related costs		612		—
Other operating expense, net		—		(7,325)
Operating income		612		45,761
Interest income		—		123
Interest expense		—		(15,360)
Income before income taxes		612		30,524
Income tax expense (2)		(173)		(8,605)
Net income		439		21,919
Less: Net income attributable to noncontrolling interests		—		(155)
Net income attributable to Sterling common stockholders	21,325	$	439	$	21,764
Net income per share attributable to Sterling common stockholders:
Basic	0.77	$	0.01	$	0.78
Diluted	0.76	$	0.02	$	0.78
Weighted average common shares outstanding:
Basic				27,794
Diluted				27,887
(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.
(2) Adjusted Non-GAAP income tax expense of 8,605 includes non-cash federal income tax expense of 6,396.

All values are in US Dollars.

STERLING CONSTRUCTION COMPANY, INC. & SUBSIDIARIES

CONDENSED 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.
	Six Months Ended June 30, 2019
	As Reported (GAAP)		Adjustment		Adjusted<br>(Non-GAAP)
Revenues	$	488,035	$	—	$	488,035
Cost of revenues	(443,036)		—		(443,036)
Gross profit	44,999		—		44,999
General and administrative expense	(22,063)		—		(22,063)
Intangible asset amortization	(1,200)				(1,200)
Acquisition related costs	(262)		262		—
Other operating expense, net	(5,570)		—		(5,570)
Operating income	15,904		262		16,166
Interest income	655		—		655
Interest expense	(5,964)		—		(5,964)
Income before income taxes	10,595		262		10,857
Income tax expense	(869)		—		(869)
Net income	9,726		262		9,988
Less: Net income attributable to noncontrolling interests	(83)		—		(83)
Net income attributable to Sterling common stockholders	$	9,643	$	262	$	9,905
Net income per share attributable to Sterling common stockholders:
Basic	$	0.37	$	0.01	$	0.38
Diluted	$	0.36	$	0.01	$	0.37
Weighted average common shares outstanding:
Basic	26,357				26,357
Diluted	26,657				26,657
^(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

CONDENSED 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.
		Adjustment		Adjusted<br>(Non-GAAP)
Revenues	1,126,278	$	—	$	1,126,278
Cost of revenues		—		(1,018,484)
Gross profit		—		107,794
General and administrative expense		—		(49,200)
Intangible asset amortization				(4,695)
Acquisition related costs		4,311		—
Other operating expense, net		—		(11,837)
Operating income		4,311		42,062
Interest income		—		1,142
Interest expense		—		(16,686)
Loss on extinguishment of debt		7,728		—
Income before income taxes		12,039		26,518
Income tax expense		(27,398)		(1,182)
Net income		(15,359)		25,336
Less: Net income attributable to noncontrolling interests		—		(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
Diluted				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.
(2) Includes a fourth quarter charge for a legacy project of 10.2 million or 0.36 per diluted share based on 28,201 weighted average common shares outstanding in the quarter.

All values are in US Dollars.

STERLING CONSTRUCTION COMPANY, INC. & SUBSIDIARIES

EBITDA Reconciliation

(In thousands)

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Net income attributable to Sterling common stockholders	$	18,210	$	7,828	$	21,325	$	9,643
Depreciation and amortization	8,256		4,171		16,541		8,473
Interest expense, net of interest income	7,533		2,613		15,237		5,309
Income tax (benefit) expense	7,248		706		8,432		869
EBITDA ^(1)^	41,247		15,318		61,535		24,294
Acquisition related costs	139		262		612		262
Adjusted EBITDA^(2)^	$	41,386	$	15,580	$	62,147	$	24,556
^(1)^The Company defines EBITDA as GAAP net income (loss) 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.

Document

Exhibit 99.2