Exhibit 99.1
NEWS RELEASE
For Immediate Release:
November 2, 2020
Sterling Reports 2020 Third Quarter Results
Strong Profitability and Cash Flow Further Enhance Liquidity Position
Record Backlog Provides Visibility Into 2021 Growth
THE WOODLANDS, TX – November 2, 2020 – Sterling Construction Company, Inc. (NasdaqGS: STRL) (“Sterling” or “the Company”) today announced financial results for the third quarter 2020.
Consolidated Third Quarter 2020 Financial Results Compared to Third Quarter 2019:
•Revenues were $383.5 million compared to $291.7 million;
•Gross margin was 13.0% of revenues compared to 10.0%;
•Net Income was $15.2 million compared to $8.0 million;
•EPS was $0.54 compared to $0.30; and,
•EBITDA was $36.7 million compared to $15.4 million.
Consolidated Financial Position and Liquidity:
•Cash and Cash Equivalents were $72.6 million at September 30, 2020 compared to $45.7 million at December 31, 2019;
•Cash flows from operations were $90.9 million for the nine months ended September 30, 2020 compared to $8.5 million for the comparable prior year period;
•Payments of debt totaled $52.7 million for the nine months ended September 30, 2020;
•Debt totaled $392.7 million (or $320.1 million, net of cash) at September 30, 2020 compared to $433.1 million (or $387.4 million, net of cash) at December 31, 2019; and,
•Zero drawn and full availability on the $75.0 million Revolving Credit Facility.
Heavy Civil and Specialty Services Backlog Highlights:
•Backlog at September 30, 2020 was a record $1.24 billion, up from $1.07 billion at December 31, 2019.
•Combined Backlog at September 30, 2020 was $1.51 billion, up from $1.34 billion at December 31, 2019. Combined Backlog includes the aforementioned Backlog and Unsigned Low-bid Awards of $270 million and $273 million at September 30, 2020 and December 31, 2019, respectively.
•Gross margin in Backlog increased approximately 90 basis points, from 11.5% at December 31, 2019 to 12.4% at September 30, 2020. Gross margin in Combined Backlog has increased approximately 60 basis points, from 11.0% at December 31, 2019 to 11.6% at September 30, 2020.
Maintains 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.
•Expected dilutive average shares outstanding: 28.1 million.
CEO Remarks and Outlook
“We had another great quarter, nearly doubling our net income year-over-year and further enhancing our financial position through strong free cash flow generation,” stated Joe Cutillo, Sterling’s Chief Executive Officer. “The third quarter was yet another example of the effectiveness of our strategic focus on diversifying into higher margin, higher value add, lower risk work in terms of producing growth in bottom line results. I’d like to thank all of our nearly 3,000 employees for their hard work and dedication to the company throughout this unusual year. Their commitment to our shared vision has enabled us to achieve record results for the first nine months of the year, while at the same time upholding our COVID-19 protocols in order to keep our team safe and healthy.”
“Our Specialty Services segment, which is comprised primarily of our Plateau operations, once again delivered an outstanding bottom line performance reflecting its team’s consistent and highly effective project execution. Plateau continues to enjoy strong backlog given the market demand for their highly specialized capabilities for large distribution and data centers and warehousing customers. Our Residential segment capitalized on the recovery in the Texas home building market and continued its healthy growth, delivering year-over-year improvement in revenues and operating profit. The expansion of our Residential segment into the Houston market is progressing as scheduled and this large metropolitan area is well on its way to becoming a meaningful percentage of our overall slab count. Our Heavy Civil segment results were off modestly from last year’s third quarter due largely to a charge for increased estimated cost to complete the construction of three separate bridges in Texas and a shift in mix in the quarter. We expect to see an improved mix of revenues in the coming quarters as we ramp up on several of the attractive design-build and non-heavy highway projects we’ve booked in recent months,” continued Mr. Cutillo.
“We are very pleased with our liquidity position and cash generation. As of September 30, 2020, we have generated over $90 million of cash flow from operations and have reduced our total debt by $40.4 million (or $67.3 million, net of cash), while investing $20.5 million of capital expenditures, net of proceeds. We remain comfortable with our capital structure and believe that we have more than adequate financial flexibility to pursue new opportunities and continue our profitable growth. We expect to have a further reduction of debt over the balance of 2020, which will allow us to enter 2021 from a position of further improved financial strength,” added Mr. Cutillo.
Mr. Cutillo concluded, “Looking ahead, despite the pandemic-related uncertainty persisting in the U.S. economy, we are maintaining our full year 2020 guidance for revenues of between $1.415 billion and $1.430 billion and 2020 net income attributable to Sterling common stockholders of between $41 million and $44 million, excluding acquisition related costs of $1 million to $2 million, compared to $24.5 million of Adjusted Net Income in 2019. We expect our full year 2020 diluted average common shares outstanding to be approximately 28.1 million.”
Conference Call
Sterling’s management will hold a conference call to discuss these results and recent corporate developments on Tuesday, November 3, 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. 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 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 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 duration of the COVID-19 pandemic and its ongoing or further negative impact on global economic conditions; 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.
Contact: Sterling Construction Company, Inc. Ron Ballschmiede, Chief Financial Officer 281-214-0800 | Investor Relations Counsel: The Equity Group Inc. Fred Buonocore, CFA 212-836-9607 Mike Gaudreau 212-836-9620 | ||||
STERLING CONSTRUCTION COMPANY, INC. & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
| Revenues | $ | 383,458 | $ | 291,699 | $ | 1,080,184 | $ | 779,734 | |||||||||||||||
| Cost of revenues | (333,542) | (262,483) | (935,424) | (705,519) | |||||||||||||||||||
| Gross profit | 49,916 | 29,216 | 144,760 | 74,215 | |||||||||||||||||||
| General and administrative expense | (15,154) | (10,239) | (51,209) | (32,302) | |||||||||||||||||||
| Intangible asset amortization | (2,866) | (600) | (8,569) | (1,800) | |||||||||||||||||||
| Acquisition related costs | (401) | (1,896) | (1,013) | (2,158) | |||||||||||||||||||
| Other operating expense, net | (2,664) | (4,366) | (9,989) | (9,936) | |||||||||||||||||||
| Operating income | 28,831 | 12,115 | 73,980 | 28,019 | |||||||||||||||||||
| Interest income | 23 | 331 | 146 | 986 | |||||||||||||||||||
| Interest expense | (7,177) | (3,024) | (22,537) | (8,988) | |||||||||||||||||||
| Income before income taxes | 21,677 | 9,422 | 51,589 | 20,017 | |||||||||||||||||||
| Income tax expense | (6,280) | (913) | (14,712) | (1,782) | |||||||||||||||||||
| Net income | 15,397 | 8,509 | 36,877 | 18,235 | |||||||||||||||||||
| Less: Net income attributable to noncontrolling interests | (240) | (552) | (395) | (635) | |||||||||||||||||||
| Net income attributable to Sterling common stockholders | $ | 15,157 | $ | 7,957 | $ | 36,482 | $ | 17,600 | |||||||||||||||
| Net income per share attributable to Sterling common stockholders: | |||||||||||||||||||||||
| Basic | $ | 0.54 | $ | 0.30 | $ | 1.31 | $ | 0.67 | |||||||||||||||
| Diluted | $ | 0.54 | $ | 0.30 | $ | 1.30 | $ | 0.66 | |||||||||||||||
| Weighted average common shares outstanding: | |||||||||||||||||||||||
| Basic | 28,003 | 26,365 | 27,832 | 26,359 | |||||||||||||||||||
| Diluted | 28,233 | 26,637 | 27,986 | 26,661 | |||||||||||||||||||
STERLING CONSTRUCTION COMPANY, INC. & SUBSIDIARIES
SEGMENT INFORMATION
(In thousands)
(Unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||||
| 2020 | % of Revenue | 2019 | % of Revenue | 2020 | % of Revenue | 2019 | % of Revenue | ||||||||||||||||||||||||||||||||||||||||
| Revenue | |||||||||||||||||||||||||||||||||||||||||||||||
| Heavy Civil | $ | 201,078 | 52% | $ | 218,894 | 75% | $ | 577,141 | 54% | $ | 569,635 | 73% | |||||||||||||||||||||||||||||||||||
| Specialty Services | 139,971 | 37% | 32,863 | 11% | 380,397 | 35% | 91,436 | 12% | |||||||||||||||||||||||||||||||||||||||
| Residential | 42,409 | 11% | 39,942 | 14% | 122,646 | 11% | 118,663 | 15% | |||||||||||||||||||||||||||||||||||||||
| Total Revenue | $ | 383,458 | $ | 291,699 | $ | 1,080,184 | $ | 779,734 | |||||||||||||||||||||||||||||||||||||||
| Operating Income | |||||||||||||||||||||||||||||||||||||||||||||||
| Heavy Civil | $ | 2,405 | 1.2% | $ | 7,420 | 3.4% | $ | 2,679 | 0.5% | $ | 11,020 | 1.9% | |||||||||||||||||||||||||||||||||||
| Specialty Services | 21,474 | 15.3% | 1,371 | 4.2% | 55,834 | 14.7% | 3,284 | 3.6% | |||||||||||||||||||||||||||||||||||||||
| Residential | 5,353 | 12.6% | 5,220 | 13.1% | 16,480 | 13.4% | 15,873 | 13.4% | |||||||||||||||||||||||||||||||||||||||
| Subtotal | 29,232 | 7.6% | 14,011 | 4.8% | 74,993 | 6.9% | 30,177 | 3.9% | |||||||||||||||||||||||||||||||||||||||
| Acquisition related costs | (401) | (1,896) | (1,013) | (2,158) | |||||||||||||||||||||||||||||||||||||||||||
| Total Operating Income | $ | 28,831 | 7.5% | $ | 12,115 | 4.2% | $ | 73,980 | 6.8% | $ | 28,019 | 3.6% | |||||||||||||||||||||||||||||||||||
STERLING CONSTRUCTION COMPANY, INC. & SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
(Unaudited)
| September 30, 2020 | December 31, 2019 | ||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 72,593 | $ | 45,733 | |||||||
| Accounts receivable, including retainage | 271,342 | 248,247 | |||||||||
| Costs and estimated earnings in excess of billings | 55,310 | 42,555 | |||||||||
| Receivables from and equity in construction joint ventures | 13,802 | 9,196 | |||||||||
| Other current assets | 14,171 | 11,790 | |||||||||
| Total current assets | 427,218 | 357,521 | |||||||||
| Property and equipment, net | 121,534 | 116,030 | |||||||||
| Operating lease right-of-use assets | 17,250 | 13,979 | |||||||||
| Goodwill | 192,014 | 191,892 | |||||||||
| Other intangibles, net | 247,754 | 256,323 | |||||||||
| Deferred tax asset, net | 16,589 | 26,012 | |||||||||
| Other non-current assets, net | 153 | 183 | |||||||||
| Total assets | $ | 1,022,512 | $ | 961,940 | |||||||
| Liabilities and Stockholders’ Equity | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 127,336 | $ | 137,593 | |||||||
| Billings in excess of costs and estimated earnings | 126,986 | 85,011 | |||||||||
| Current maturities of long-term debt | 57,476 | 42,473 | |||||||||
| Current portion of long-term lease obligations | 7,624 | 7,095 | |||||||||
| Income taxes payable | 2,251 | 1,212 | |||||||||
| Accrued compensation | 24,328 | 13,727 | |||||||||
| Other current liabilities | 11,368 | 6,393 | |||||||||
| Total current liabilities | 357,369 | 293,504 | |||||||||
| Long-term debt | 335,237 | 390,627 | |||||||||
| Long-term lease obligations | 9,668 | 6,976 | |||||||||
| Members’ interest subject to mandatory redemption and undistributed earnings | 50,798 | 49,003 | |||||||||
| Other long-term liabilities | 10,124 | 619 | |||||||||
| Total liabilities | 763,196 | 740,729 | |||||||||
| Stockholders’ equity: | |||||||||||
| Common stock | 283 | 283 | |||||||||
| Additional paid in capital | 254,860 | 251,019 | |||||||||
| Treasury Stock, at cost | (2,651) | (6,142) | |||||||||
| Retained earnings (deficit) | 11,449 | (25,033) | |||||||||
| Accumulated other comprehensive loss | (6,313) | (209) | |||||||||
| Total Sterling stockholders’ equity | 257,628 | 219,918 | |||||||||
| Noncontrolling interests | 1,688 | 1,293 | |||||||||
| Total stockholders’ equity | 259,316 | 221,211 | |||||||||
| Total liabilities and stockholders’ equity | $ | 1,022,512 | $ | 961,940 | |||||||
STERLING CONSTRUCTION COMPANY, INC. & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| Nine Months Ended September 30, | |||||||||||
| 2020 | 2019 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net income | $ | 36,877 | $ | 18,235 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | 24,639 | 12,288 | |||||||||
| Amortization of debt issuance costs and non-cash interest | 2,489 | 2,375 | |||||||||
| Gain on disposal of property and equipment | (1,042) | (466) | |||||||||
| Deferred taxes | 10,946 | 1,561 | |||||||||
| Stock-based compensation expense | 7,961 | 2,489 | |||||||||
| Change in interest rate hedge | 251 | — | |||||||||
| Changes in operating assets and liabilities | 8,828 | (28,005) | |||||||||
| Net cash provided by operating activities | 90,949 | 8,477 | |||||||||
| Cash flows from investing activities: | |||||||||||
| Capital expenditures | (22,088) | (7,871) | |||||||||
| Proceeds from sale of property and equipment | 1,557 | 1,265 | |||||||||
| Net cash used in investing activities | (20,531) | (6,606) | |||||||||
| Cash flows from financing activities: | |||||||||||
| Repayments of debt | (52,695) | (10,435) | |||||||||
| Distributions to noncontrolling interest owners | — | (5,900) | |||||||||
| Purchase of treasury stock | — | (3,201) | |||||||||
| Other borrowings | 9,137 | 100 | |||||||||
| Net cash used in financing activities | (43,558) | (19,436) | |||||||||
| Net change in cash and cash equivalents | 26,860 | (17,565) | |||||||||
| Cash and cash equivalents at beginning of period | 45,733 | 94,095 | |||||||||
| Cash and cash equivalents at end of period | $ | 72,593 | $ | 76,530 | |||||||
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 September 30, 2020 | |||||||||||||||||
| As Reported (GAAP) | Adjustment | Adjusted (Non-GAAP) | |||||||||||||||
| Revenues | $ | 383,458 | $ | — | $ | 383,458 | |||||||||||
| Cost of revenues | (333,542) | — | (333,542) | ||||||||||||||
| Gross profit | 49,916 | — | 49,916 | ||||||||||||||
| General and administrative expense | (15,154) | — | (15,154) | ||||||||||||||
| Intangible asset amortization | (2,866) | — | (2,866) | ||||||||||||||
| Acquisition related costs | (401) | 401 | — | ||||||||||||||
| Other operating expense, net | (2,664) | — | (2,664) | ||||||||||||||
| Operating income | 28,831 | 401 | 29,232 | ||||||||||||||
| Interest income | 23 | — | 23 | ||||||||||||||
| Interest expense | (7,177) | — | (7,177) | ||||||||||||||
| Income before income taxes | 21,677 | 401 | 22,078 | ||||||||||||||
Income tax expense (2) | (6,280) | (116) | (6,396) | ||||||||||||||
| Net income | 15,397 | 285 | 15,682 | ||||||||||||||
| Less: Net income attributable to noncontrolling interests | (240) | — | (240) | ||||||||||||||
| Net income attributable to Sterling common stockholders | $ | 15,157 | $ | 285 | $ | 15,442 | |||||||||||
| Net income per share attributable to Sterling common stockholders: | |||||||||||||||||
| Basic | $ | 0.54 | $ | 0.01 | $ | 0.55 | |||||||||||
| Diluted | $ | 0.54 | $ | 0.01 | $ | 0.55 | |||||||||||
| Weighted average common shares outstanding: | |||||||||||||||||
| Basic | 28,003 | 28,003 | |||||||||||||||
| Diluted | 28,233 | 28,233 | |||||||||||||||
(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 $6,396 includes non-cash federal income tax expense of $4,839. | |||||||||||||||||
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 September 30, 2019 | |||||||||||||||||
| As Reported (GAAP) | Adjustment | Adjusted (Non-GAAP) | |||||||||||||||
| Revenues | $ | 291,699 | $ | — | $ | 291,699 | |||||||||||
| Cost of revenues | (262,483) | — | (262,483) | ||||||||||||||
| Gross profit | 29,216 | — | 29,216 | ||||||||||||||
| General and administrative expense | (10,239) | — | (10,239) | ||||||||||||||
| Intangible asset amortization | (600) | — | (600) | ||||||||||||||
| Acquisition related costs | (1,896) | 1,896 | — | ||||||||||||||
| Other operating expense, net | (4,366) | — | (4,366) | ||||||||||||||
| Operating income | 12,115 | 1,896 | 14,011 | ||||||||||||||
| Interest income | 331 | — | 331 | ||||||||||||||
| Interest expense | (3,024) | — | (3,024) | ||||||||||||||
| Income before income taxes | 9,422 | 1,896 | 11,318 | ||||||||||||||
Income tax expense (2) | (913) | (184) | (1,097) | ||||||||||||||
| Net income | 8,509 | 1,712 | 10,221 | ||||||||||||||
| Less: Net income attributable to noncontrolling interests | (552) | — | (552) | ||||||||||||||
| Net income attributable to Sterling common stockholders | $ | 7,957 | $ | 1,712 | $ | 9,669 | |||||||||||
| Net income per share attributable to Sterling common stockholders: | |||||||||||||||||
| Basic | $ | 0.30 | $ | 0.07 | $ | 0.37 | |||||||||||
| Diluted | $ | 0.30 | $ | 0.06 | $ | 0.36 | |||||||||||
| Weighted average common shares outstanding: | |||||||||||||||||
| Basic | 26,365 | 26,365 | |||||||||||||||
| Diluted | 26,637 | 26,637 | |||||||||||||||
(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 $1,097 includes non-cash federal income tax expense of $984. | |||||||||||||||||
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. | |||||||||||||||||
| Nine Months Ended September 30, 2020 | |||||||||||||||||
| As Reported (GAAP) | Adjustment | Adjusted (Non-GAAP) | |||||||||||||||
| Revenues | $ | 1,080,184 | $ | — | $ | 1,080,184 | |||||||||||
| Cost of revenues | (935,424) | — | (935,424) | ||||||||||||||
| Gross profit | 144,760 | — | 144,760 | ||||||||||||||
| General and administrative expense | (51,209) | — | (51,209) | ||||||||||||||
| Intangible asset amortization | (8,569) | — | (8,569) | ||||||||||||||
| Acquisition related costs | (1,013) | 1,013 | — | ||||||||||||||
| Other operating expense, net | (9,989) | — | (9,989) | ||||||||||||||
| Operating income | 73,980 | 1,013 | 74,993 | ||||||||||||||
| Interest income | 146 | — | 146 | ||||||||||||||
| Interest expense | (22,537) | — | (22,537) | ||||||||||||||
| Income before income taxes | 51,589 | 1,013 | 52,602 | ||||||||||||||
Income tax expense (2) | (14,712) | (289) | (15,001) | ||||||||||||||
| Net income | 36,877 | 724 | 37,601 | ||||||||||||||
| Less: Net income attributable to noncontrolling interests | (395) | — | (395) | ||||||||||||||
| Net income attributable to Sterling common stockholders | $ | 36,482 | $ | 724 | $ | 37,206 | |||||||||||
| Net income per share attributable to Sterling common stockholders: | |||||||||||||||||
| Basic | $ | 1.31 | $ | 0.03 | $ | 1.34 | |||||||||||
| Diluted | $ | 1.30 | $ | 0.03 | $ | 1.33 | |||||||||||
| Weighted average common shares outstanding: | |||||||||||||||||
| Basic | 27,832 | 27,832 | |||||||||||||||
| Diluted | 27,986 | 27,986 | |||||||||||||||
(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 $15,001 includes non-cash federal income tax expense of $11,235. | |||||||||||||||||
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. | |||||||||||||||||
| Nine Months Ended September 30, 2019 | |||||||||||||||||
| As Reported (GAAP) | Adjustment | Adjusted (Non-GAAP) | |||||||||||||||
| Revenues | $ | 779,734 | $ | — | $ | 779,734 | |||||||||||
| Cost of revenues | (705,519) | — | (705,519) | ||||||||||||||
| Gross profit | 74,215 | — | 74,215 | ||||||||||||||
| General and administrative expense | (32,302) | — | (32,302) | ||||||||||||||
| Intangible asset amortization | (1,800) | — | (1,800) | ||||||||||||||
| Acquisition related costs | (2,158) | 2,158 | — | ||||||||||||||
| Other operating expense, net | (9,936) | — | (9,936) | ||||||||||||||
| Operating income | 28,019 | 2,158 | 30,177 | ||||||||||||||
| Interest income | 986 | — | 986 | ||||||||||||||
| Interest expense | (8,988) | — | (8,988) | ||||||||||||||
| Income before income taxes | 20,017 | 2,158 | 22,175 | ||||||||||||||
Income tax expense (2) | (1,782) | (192) | (1,974) | ||||||||||||||
| Net income | 18,235 | 1,966 | 20,201 | ||||||||||||||
| Less: Net income attributable to noncontrolling interests | (635) | — | (635) | ||||||||||||||
| Net income attributable to Sterling common stockholders | $ | 17,600 | $ | 1,966 | $ | 19,566 | |||||||||||
| Net income per share attributable to Sterling common stockholders: | |||||||||||||||||
| Basic | $ | 0.67 | $ | 0.07 | $ | 0.74 | |||||||||||
| Diluted | $ | 0.66 | $ | 0.07 | $ | 0.73 | |||||||||||
| Weighted average common shares outstanding: | |||||||||||||||||
| Basic | 26,359 | 26,359 | |||||||||||||||
| Diluted | 26,661 | 26,661 | |||||||||||||||
(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 $1,974 includes non-cash federal income tax expense of $1,753. | |||||||||||||||||
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. | |||||||||||||||||
| Year Ended December 31, 2019 | |||||||||||||||||
As Reported (GAAP) (2) | Adjustment | Adjusted (Non-GAAP) | |||||||||||||||
| Revenues | $ | 1,126,278 | $ | — | $ | 1,126,278 | |||||||||||
| Cost of revenues | (1,018,484) | — | (1,018,484) | ||||||||||||||
| Gross profit | 107,794 | — | 107,794 | ||||||||||||||
| General and administrative expense | (49,200) | — | (49,200) | ||||||||||||||
| Intangible asset amortization | (4,695) | (4,695) | |||||||||||||||
| Acquisition related costs | (4,311) | 4,311 | — | ||||||||||||||
| Other operating expense, net | (11,837) | — | (11,837) | ||||||||||||||
| Operating income | 37,751 | 4,311 | 42,062 | ||||||||||||||
| Interest income | 1,142 | — | 1,142 | ||||||||||||||
| Interest expense | (16,686) | — | (16,686) | ||||||||||||||
| Loss on extinguishment of debt | (7,728) | 7,728 | — | ||||||||||||||
| Income before income taxes | 14,479 | 12,039 | 26,518 | ||||||||||||||
| Income tax expense | 26,216 | (27,398) | (1,182) | ||||||||||||||
| Net income | 40,695 | (15,359) | 25,336 | ||||||||||||||
| Less: Net income attributable to noncontrolling interests | (794) | — | (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 | 26,671 | |||||||||||||||
| Diluted | 27,119 | 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. | |||||||||||||||||
STERLING CONSTRUCTION COMPANY, INC. & SUBSIDIARIES
EBITDA Reconciliation
(In thousands)
(Unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
| Net income attributable to Sterling common stockholders | $ | 15,157 | $ | 7,957 | $ | 36,482 | $ | 17,600 | |||||||||||||||
| Depreciation and amortization | 8,098 | 3,815 | 24,639 | 12,288 | |||||||||||||||||||
| Interest expense, net of interest income | 7,154 | 2,693 | 22,391 | 8,002 | |||||||||||||||||||
| Income tax (benefit) expense | 6,280 | 913 | 14,712 | 1,782 | |||||||||||||||||||
EBITDA (1) | 36,689 | 15,378 | 98,224 | 39,672 | |||||||||||||||||||
| Acquisition related costs | 401 | 1,896 | 1,013 | 2,158 | |||||||||||||||||||
Adjusted EBITDA (2) | $ | 37,090 | $ | 17,274 | $ | 99,237 | $ | 41,830 | |||||||||||||||
(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. | |||||||||||||||||||||||
