STRL 8-K
Sterling Infrastructure, Inc. (STRL)
8-K
2023-02-28
For: 2023-02-27
View Original
Added on
April 09, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM | ||
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 27, 2023
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(Exact name of registrant as specified in its charter) | ||||||||||||||
| (State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||||||||||||
| (Address of principal executive offices) | (Zip Code) | |||||||||||||
Registrant’s telephone number, including area code: ( | ||||||||||||||
| Securities registered pursuant to Section 12(b) of the Act: | ||||||||
| (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: | |||||||||||
| 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. | ☐ | ||||||||||
| Item 2.02 | Results of Operations and Financial Condition. | ||||
On February 27, 2023, Sterling Infrastructure, Inc. (the “Company”) issued a press release announcing financial results for the three and twelve months ended December 31, 2022 and provided full year 2023 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 (the “Securities Act”), 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 February 28, 2023, the Company will host a conference call to discuss the fourth quarter and full year 2022 results as well as corporate developments. The slides to be used during the conference call are being furnished with this Current Report on Form 8-K as Exhibit 99.2 and are 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 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, 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) Exhibits
| Exhibit Number | Description | |||||||
| 99.1 | ||||||||
| 99.2 | ||||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |||||||
| 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 INFRASTRUCTURE, INC. | |||||||||||
| Date: | By: | /s/ Ronald A. Ballschmiede | |||||||||
| Ronald A. Ballschmiede | |||||||||||
| Chief Financial Officer | |||||||||||
Exhibit 99.1
NEWS RELEASE
For Immediate Release:
February 27, 2023
Sterling Reports Record Fourth Quarter and Full Year 2022 Results
Provides 2023 Full Year Guidance
THE WOODLANDS, TX – February 27, 2023 – Sterling Infrastructure, Inc. (NasdaqGS: STRL) (“Sterling” or the “Company”) today announced financial results for the fourth quarter and full year 2022 and provided full year 2023 guidance.
Fourth Quarter 2022 Results (compared with prior year period)
(The financial information herein is from continuing operations unless otherwise noted)
•Revenues of $448.6 million, an increase of 26%
•Gross margin of 15.4%, an increase from 14.8%
•Net Income was $20.2 million, or $0.66 per diluted share, an increase of 80% and 74%, respectively
•EBITDA(1) of $49.9 million, an increase of 78%; Adjusted EBITDA(1) of $50.1 million, an increase of 58%
•Cash flows from operations(2) of $88.5 million and $219.1 million for the fourth quarter and year ended December 31, 2022, respectively
•Cash and Cash Equivalents totaled $181.5 million at December 31, 2022
•Backlog at December 31, 2022 was $1.41 billion, an increase of 7% over December 31, 2021
•Combined backlog(3) at December 31, 2022 was $1.69 billion, an increase of 25% over December 31, 2021
Continuing Operations–For the full year ended December 31, 2022, the Company reported net income of $96.7 million, or $3.16 per diluted share, versus $61.5 million, or $2.11 per diluted share, for 2021. Revenue increased by 25% over 2021. EBITDA(1) increased 51% to $208.7 million in 2022, versus $138.1 million in 2021. Adjusted EBITDA(1) increased 49% to $209.5 million in 2022, versus $140.9 million in 2021.
Discontinued Operations–For the full year ended December 31, 2022, the Company reported net income of $9.7 million, or $0.32 per diluted share, versus $1.2 million, or $0.04 per diluted share, for 2021. The increase was primarily driven by a pretax gain of $16.7 million, as the result of the disposition of the Company’s 50% ownership interest in its partnership with Myers & Sons Construction L.P.
For the full year ended December 31, 2022, the Company reported net income attributable to Sterling common stockholders(2) of $106.5 million, or $3.48 per diluted share, versus $62.6 million, or $2.15 per diluted share, for 2021.
CEO Remarks and Outlook
“2022 marked another year of significant progress in transforming the company into a leading Infrastructure Service Provider. During a time of increased inflation and supply chain disruptions, our team’s ability to grow revenue 25% and improve margins 110 basis points over the prior year is truly amazing,” stated Joe Cutillo, Sterling’s Chief Executive Officer.
“Our E-Infrastructure Solutions segment delivered remarkable top-line growth of 93% compared to the prior year and remained our largest revenue, fastest-growing and highest-margin segment. E-Infrastructure organic growth was 31% while 62% was from the acquisition of Petillo. In our Building Solutions and Transportation Solutions segments we saw
(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 the impact of the net gain on extinguishment of debt and acquisition related costs. See the “Non-GAAP Measures” and “EBITDA Reconciliation” sections below for more information.
(2) Includes both Continuing and Discontinued Operations.
(3) Combined Backlog includes Unsigned Low-bid Awards of $275.0 million and $22.5 million at December 31, 2022 and December 31, 2021, respectively.
slower growth but significant operating income improvements. In Building Solutions, our operating income improved 13% and in Transportation Solutions, our operating income improved 34%,” continued Mr. Cutillo.
“We enter 2023 stronger than ever. With our record backlog and strong demand in E-Infrastructure and Transportation Solutions, we are confident in our ability to deliver another year of record earnings and value to our customers and investors,” Mr. Cutillo concluded.
Full Year 2023 Guidance:
•Revenue of $1.9 billion to $2.0 billion
•Net Income of $104 million to $110 million
•EPS of $3.33 to $3.53
•EBITDA(1) of $220 million to $235 million
Conference Call
Sterling’s management will hold a conference call to discuss these results and recent corporate developments on Tuesday, February 28, 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 the United States (the “U.S.”), primarily across the Southern, Northeastern and Mid-Atlantic U.S., the Rocky Mountain States, and Hawaii, as well as other areas with strategic construction opportunities. E-Infrastructure Solutions projects include advanced, large-scale site development systems and services for data centers, e-commerce distribution centers, warehousing, transportation, energy and more. Transportation Solutions includes infrastructure and rehabilitation projects for highways, roads, bridges, airports, ports, light rail and storm drainage systems. 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.”
our people to move and our country to grow.”
(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.
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 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,” “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.
Company Contact: Sterling Infrastructure, Inc. Ron Ballschmiede, Chief Financial Officer 281-214-0777 | Investor Relations Contact: The Equity Group Inc. Jeremy Hellman, CFA 212-836-9626 | ||||
STERLING INFRASTRUCTURE, INC. & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
| Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Continuing Operations: | |||||||||||||||||||||||
| Revenues | $ | 448,607 | $ | 355,375 | $ | 1,769,436 | $ | 1,414,374 | |||||||||||||||
| Cost of revenues | (379,641) | (302,863) | (1,494,869) | (1,210,842) | |||||||||||||||||||
| Gross profit | 68,966 | 52,512 | 274,567 | 203,532 | |||||||||||||||||||
| General and administrative expense | (23,104) | (22,971) | (86,480) | (69,153) | |||||||||||||||||||
| Intangible asset amortization | (3,509) | (2,866) | (14,100) | (11,464) | |||||||||||||||||||
| Acquisition related costs | (265) | (3,877) | (827) | (3,877) | |||||||||||||||||||
| Other operating expense, net | (5,045) | (2,740) | (13,290) | (12,027) | |||||||||||||||||||
| Operating income | 37,043 | 20,058 | 159,870 | 107,011 | |||||||||||||||||||
| Interest income | 684 | 12 | 885 | 45 | |||||||||||||||||||
| Interest expense | (6,329) | (3,675) | (20,591) | (19,311) | |||||||||||||||||||
| Gain on extinguishment of debt, net | — | — | — | 1,064 | |||||||||||||||||||
| Income before income taxes | 31,398 | 16,395 | 140,164 | 88,809 | |||||||||||||||||||
| Income tax expense | (10,741) | (4,552) | (41,707) | (24,874) | |||||||||||||||||||
| Net income, including noncontrolling interests | 20,657 | 11,843 | 98,457 | 63,935 | |||||||||||||||||||
| Less: Net income attributable to noncontrolling interests | (424) | (573) | (1,740) | (2,478) | |||||||||||||||||||
| Net income from Continuing Operations | $ | 20,233 | $ | 11,270 | $ | 96,717 | $ | 61,457 | |||||||||||||||
| Discontinued Operations: | |||||||||||||||||||||||
| Pretax (loss) income | $ | (1,561) | $ | (289) | $ | (4,848) | $ | 1,214 | |||||||||||||||
| Pretax gain on disposition | 16,687 | — | 16,687 | — | |||||||||||||||||||
| Income tax expense | (3,634) | (73) | (2,095) | (26) | |||||||||||||||||||
| Net income (loss) from Discontinued Operations | $ | 11,492 | $ | (362) | $ | 9,744 | $ | 1,188 | |||||||||||||||
| Net income attributable to Sterling common stockholders | $ | 31,725 | $ | 10,908 | $ | 106,461 | $ | 62,645 | |||||||||||||||
| Net income per share from Continuing Operations: | |||||||||||||||||||||||
| Basic | $ | 0.67 | $ | 0.39 | $ | 3.20 | $ | 2.15 | |||||||||||||||
| Diluted | $ | 0.66 | $ | 0.38 | $ | 3.16 | $ | 2.11 | |||||||||||||||
| Net income (loss) per share from Discontinued Operations: | |||||||||||||||||||||||
| Basic | $ | 0.38 | $ | (0.01) | $ | 0.32 | $ | 0.04 | |||||||||||||||
| Diluted | $ | 0.37 | $ | (0.01) | $ | 0.32 | $ | 0.04 | |||||||||||||||
| Net income per share attributable to Sterling common stockholders: | |||||||||||||||||||||||
| Basic | $ | 1.05 | $ | 0.38 | $ | 3.53 | $ | 2.19 | |||||||||||||||
| Diluted | $ | 1.03 | $ | 0.37 | $ | 3.48 | $ | 2.15 | |||||||||||||||
| Weighted average common shares outstanding: | |||||||||||||||||||||||
| Basic | 30,324 | 28,818 | 30,199 | 28,600 | |||||||||||||||||||
| Diluted | 30,739 | 29,756 | 30,564 | 29,101 | |||||||||||||||||||
STERLING INFRASTRUCTURE, INC. & SUBSIDIARIES
SEGMENT INFORMATION
(In thousands)
(Unaudited)
| Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||||||||||||||||||||||||||||||||||
| Revenues | 2022 | % of Revenue | 2021 | % of Revenue | 2022 | % of Revenue | 2021 | % of Revenue | |||||||||||||||||||||||||||||||||||||||
| E-Infrastructure Solutions | $ | 247,272 | 55% | $ | 127,183 | 36% | $ | 905,277 | 51% | $ | 468,784 | 33% | |||||||||||||||||||||||||||||||||||
| Transportation Solutions | 126,545 | 28% | 149,517 | 42% | 542,550 | 31% | 628,190 | 45% | |||||||||||||||||||||||||||||||||||||||
| Building Solutions | 74,790 | 17% | 78,675 | 22% | 321,609 | 18% | 317,400 | 22% | |||||||||||||||||||||||||||||||||||||||
| Total Revenues | $ | 448,607 | $ | 355,375 | $ | 1,769,436 | $ | 1,414,374 | |||||||||||||||||||||||||||||||||||||||
| Operating Income (Loss) | |||||||||||||||||||||||||||||||||||||||||||||||
| E-Infrastructure Solutions | $ | 29,811 | 12.1% | $ | 18,734 | 14.7% | $ | 121,453 | 13.4% | $ | 80,478 | 17.2% | |||||||||||||||||||||||||||||||||||
| Transportation Solutions | 5,070 | 4.0% | 4,238 | 2.8% | 26,623 | 4.9% | 19,888 | 3.2% | |||||||||||||||||||||||||||||||||||||||
| Building Solutions | 8,260 | 11.0% | 9,175 | 11.7% | 36,693 | 11.4% | 32,564 | 10.3% | |||||||||||||||||||||||||||||||||||||||
| Segment Operating Income | 43,141 | 9.6% | 32,147 | 9.0% | 184,769 | 10.4% | 132,930 | 9.4% | |||||||||||||||||||||||||||||||||||||||
| Corporate | (5,833) | (8,212) | (24,072) | (22,042) | |||||||||||||||||||||||||||||||||||||||||||
| Acquisition Related Costs | (265) | (3,877) | (827) | (3,877) | |||||||||||||||||||||||||||||||||||||||||||
| Total Continued Operating Income | $ | 37,043 | 8.3% | $ | 20,058 | 5.6% | $ | 159,870 | 9.0% | $ | 107,011 | 7.6% | |||||||||||||||||||||||||||||||||||
STERLING INFRASTRUCTURE, INC. & SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
(Unaudited)
| December 31, 2022 | December 31, 2021 | ||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 181,544 | $ | 60,945 | |||||||
| Accounts receivable | 262,646 | 200,185 | |||||||||
| Contract assets | 109,803 | 75,796 | |||||||||
| Receivables from and equity in construction joint ventures | 14,122 | 9,839 | |||||||||
| Current assets of Discontinued Operations | — | 71,886 | |||||||||
| Other current assets | 29,139 | 16,040 | |||||||||
| Total current assets | 597,254 | 434,691 | |||||||||
| Property and equipment, net | 215,482 | 193,896 | |||||||||
| Operating lease right-of-use assets, net | 59,415 | 19,473 | |||||||||
| Goodwill | 262,692 | 258,290 | |||||||||
| Other intangibles, net | 299,123 | 303,223 | |||||||||
| Non-current assets of Discontinued Operations | — | 20,746 | |||||||||
| Other non-current assets, net | 7,654 | 4,455 | |||||||||
| Total assets | $ | 1,441,620 | $ | 1,234,774 | |||||||
| Liabilities and Stockholders’ Equity | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 121,887 | $ | 112,746 | |||||||
| Contract liabilities | 239,297 | 118,672 | |||||||||
| Current maturities of long-term debt | 32,610 | 23,373 | |||||||||
| Current portion of long-term lease obligations | 19,715 | 6,557 | |||||||||
| Accrued compensation | 24,136 | 20,415 | |||||||||
| Current liabilities of Discontinued Operations | — | 51,914 | |||||||||
| Other current liabilities | 8,966 | 18,083 | |||||||||
| Total current liabilities | 446,611 | 351,760 | |||||||||
| Long-term debt | 398,735 | 428,507 | |||||||||
| Long-term lease obligations | 40,103 | 13,068 | |||||||||
| Members’ interest subject to mandatory redemption and undistributed earnings | 21,597 | 19,322 | |||||||||
| Deferred tax liability, net | 51,659 | 18,434 | |||||||||
| Long-term liabilities of Discontinued Operations | — | 38,637 | |||||||||
| Other long-term liabilities | 5,116 | 4,819 | |||||||||
| Total liabilities | 963,821 | 874,547 | |||||||||
| Stockholders’ equity: | |||||||||||
| Common stock | 306 | 298 | |||||||||
| Additional paid in capital | 287,914 | 280,274 | |||||||||
| Retained earnings | 186,379 | 79,918 | |||||||||
| Accumulated other comprehensive loss | — | (1,723) | |||||||||
| Total Sterling stockholders’ equity | 474,599 | 358,767 | |||||||||
| Noncontrolling interests | 3,200 | 1,460 | |||||||||
| Total stockholders’ equity | 477,799 | 360,227 | |||||||||
| Total liabilities and stockholders’ equity | $ | 1,441,620 | $ | 1,234,774 | |||||||
STERLING INFRASTRUCTURE, INC. & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| Years Ended December 31, | |||||||||||
| 2022 | 2021 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net income | $ | 108,201 | $ | 65,123 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | 52,066 | 34,201 | |||||||||
| Amortization of debt issuance costs and non-cash interest | 2,136 | 2,242 | |||||||||
| Gain on disposal of property and equipment | (2,637) | (1,396) | |||||||||
| Gain on debt extinguishment, net | (2,428) | (2,032) | |||||||||
| Gain on disposition of Myers | (16,687) | — | |||||||||
| Deferred taxes | 36,492 | 21,428 | |||||||||
| Stock-based compensation | 12,726 | 11,771 | |||||||||
| Change in fair value of interest rate swap | (203) | (32) | |||||||||
| Changes in operating assets and liabilities | 29,450 | 27,627 | |||||||||
| Net cash provided by operating activities | 219,116 | 158,932 | |||||||||
| Cash flows from investing activities: | |||||||||||
| Acquisitions, net of cash acquired | (18,004) | (180,911) | |||||||||
| Disposition, net of cash disposed | (15,789) | — | |||||||||
| Capital expenditures | (60,909) | (46,651) | |||||||||
| Proceeds from sale of property and equipment | 4,947 | 4,113 | |||||||||
| Net cash used in investing activities | (89,755) | (223,449) | |||||||||
| Cash flows from financing activities: | |||||||||||
| Cash received from credit facility | — | 140,000 | |||||||||
| Repayments of debt | (23,373) | (48,273) | |||||||||
| Distributions to noncontrolling interest owners | — | (2,477) | |||||||||
| Withholding taxes paid on net share settlement of equity awards | (9,416) | (7,338) | |||||||||
| Debt issuance costs | — | (1,340) | |||||||||
| Other | — | (4) | |||||||||
| Net cash used in financing activities | (32,789) | 80,568 | |||||||||
| Net change in cash, cash equivalents, and restricted cash | 96,572 | 16,051 | |||||||||
| Cash, cash equivalents and restricted cash at beginning of period | 88,693 | 72,642 | |||||||||
| Cash, cash equivalents and restricted cash at end of period | 185,265 | 88,693 | |||||||||
| Less: restricted cash (other current assets) - Continuing Operations | (3,721) | (3,821) | |||||||||
| Less: cash, cash equivalents and restricted cash - Discontinued Operations | — | (23,927) | |||||||||
| Cash and cash equivalents at end of period - Continuing Operations | $ | 181,544 | $ | 60,945 | |||||||
STERLING INFRASTRUCTURE, INC. & SUBSIDIARIES
HISTORICAL QUARTERLY SEGMENT INFORMATION
(In thousands)
(Unaudited)
The following tables present our 2022, 2021 and 2020 quarterly revenue and income from operations by segment adjusted to conform to our 2022 continuing operations presentation: | |||||||||||||||||||||||||||||
| 2022 Quarters Ended (unaudited) | |||||||||||||||||||||||||||||
| Revenues | March 31 | June 30 | September 30 | December 31 | Total | ||||||||||||||||||||||||
| E-Infrastructure Solutions | $ | 168,927 | $ | 233,548 | $ | 255,530 | $ | 247,272 | $ | 905,277 | |||||||||||||||||||
| Transportation Solutions | 116,141 | 142,640 | 157,224 | 126,545 | 542,550 | ||||||||||||||||||||||||
| Building Solutions | 80,894 | 85,639 | 80,286 | 74,790 | 321,609 | ||||||||||||||||||||||||
| Revenues | $ | 365,962 | $ | 461,827 | $ | 493,040 | $ | 448,607 | $ | 1,769,436 | |||||||||||||||||||
| Operating Income (Loss) | |||||||||||||||||||||||||||||
| E-Infrastructure Solutions | $ | 21,285 | $ | 32,824 | $ | 37,533 | $ | 29,811 | $ | 121,453 | |||||||||||||||||||
| Transportation Solutions | 4,443 | 7,410 | 9,700 | 5,070 | 26,623 | ||||||||||||||||||||||||
| Building Solutions | 9,358 | 9,751 | 9,324 | 8,260 | 36,693 | ||||||||||||||||||||||||
| Segment Operating Income | 35,086 | 49,985 | 56,557 | 43,141 | 184,769 | ||||||||||||||||||||||||
| Corporate | (5,468) | (5,766) | (7,005) | (5,833) | (24,072) | ||||||||||||||||||||||||
| Acquisition related costs | (255) | (230) | (77) | (265) | (827) | ||||||||||||||||||||||||
| Operating Income | $ | 29,363 | $ | 43,989 | $ | 49,475 | $ | 37,043 | $ | 159,870 | |||||||||||||||||||
| 2021 Quarters Ended (unaudited) | |||||||||||||||||||||||||||||
| Revenues | March 31 | June 30 | September 30 | December 31 | Total | ||||||||||||||||||||||||
| E-Infrastructure Solutions | $ | 96,572 | $ | 123,743 | $ | 121,286 | $ | 127,183 | $ | 468,784 | |||||||||||||||||||
| Transportation Solutions | 119,097 | 160,017 | 199,559 | 149,517 | 628,190 | ||||||||||||||||||||||||
| Building Solutions | 71,690 | 74,769 | 92,266 | 78,675 | 317,400 | ||||||||||||||||||||||||
| Revenues | $ | 287,359 | $ | 358,529 | $ | 413,111 | $ | 355,375 | $ | 1,414,374 | |||||||||||||||||||
| Operating Income (Loss) | |||||||||||||||||||||||||||||
| E-Infrastructure Solutions | $ | 17,812 | $ | 24,714 | $ | 19,218 | $ | 18,734 | $ | 80,478 | |||||||||||||||||||
| Transportation Solutions | 2,300 | 4,414 | 8,936 | 4,238 | 19,888 | ||||||||||||||||||||||||
| Building Solutions | 7,361 | 6,790 | 9,238 | 9,175 | 32,564 | ||||||||||||||||||||||||
| Segment Operating Income | 27,473 | 35,918 | 37,392 | 32,147 | 132,930 | ||||||||||||||||||||||||
| Corporate | (5,044) | (3,404) | (5,382) | (8,212) | (22,042) | ||||||||||||||||||||||||
| Acquisition related costs | — | — | — | (3,877) | (3,877) | ||||||||||||||||||||||||
| Operating Income | $ | 22,429 | $ | 32,514 | $ | 32,010 | $ | 20,058 | $ | 107,011 | |||||||||||||||||||
| 2020 Quarters Ended (unaudited) | |||||||||||||||||||||||||||||
| Revenues | March 31 | June 30 | September 30 | December 31 | Total | ||||||||||||||||||||||||
| E-Infrastructure Solutions | $ | 78,574 | $ | 103,310 | $ | 114,961 | $ | 100,408 | $ | 397,253 | |||||||||||||||||||
| Transportation Solutions | 108,924 | 168,413 | 143,512 | 132,301 | 553,150 | ||||||||||||||||||||||||
| Building Solutions | 64,828 | 73,951 | 67,419 | 70,137 | 276,335 | ||||||||||||||||||||||||
| Revenues | $ | 252,326 | $ | 345,674 | $ | 325,892 | $ | 302,846 | $ | 1,226,738 | |||||||||||||||||||
| Operating Income (Loss) | |||||||||||||||||||||||||||||
| E-Infrastructure Solutions | $ | 13,630 | $ | 23,573 | $ | 22,416 | $ | 16,903 | $ | 76,522 | |||||||||||||||||||
| Transportation Solutions | (1,387) | 6,739 | 3,714 | 2,932 | 11,998 | ||||||||||||||||||||||||
| Building Solutions | 7,438 | 8,950 | 7,687 | 6,366 | 30,441 | ||||||||||||||||||||||||
| Segment Operating Income | 19,681 | 39,262 | 33,817 | 26,201 | 118,961 | ||||||||||||||||||||||||
| Corporate | (7,195) | (6,589) | (5,529) | (6,007) | (25,320) | ||||||||||||||||||||||||
| Acquisition related costs | (473) | (139) | (401) | (13) | (1,026) | ||||||||||||||||||||||||
| Operating Income | $ | 12,013 | $ | 32,534 | $ | 27,887 | $ | 20,181 | $ | 92,615 | |||||||||||||||||||
STERLING INFRASTRUCTURE, INC. & SUBSIDIARIES
EBITDA FROM CONTINUING OPERATIONS RECONCILIATION
(In thousands)
(Unaudited)
| Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Net income from Continuing Operations | $ | 20,233 | $ | 11,270 | $ | 96,717 | $ | 61,457 | |||||||||||||||
| Depreciation and amortization | 13,253 | 8,456 | 50,575 | 32,503 | |||||||||||||||||||
| Interest expense, net of interest income | 5,645 | 3,663 | 19,706 | 19,266 | |||||||||||||||||||
| Income tax expense | 10,741 | 4,552 | 41,707 | 24,874 | |||||||||||||||||||
EBITDA from Continuing Operations (1) | 49,872 | 27,941 | 208,705 | 138,100 | |||||||||||||||||||
| Gain on extinguishment of debt, net | — | — | — | (1,064) | |||||||||||||||||||
| Acquisition related costs | 265 | 3,877 | 827 | 3,877 | |||||||||||||||||||
Adjusted EBITDA from Continuing Operations (2) | $ | 50,137 | $ | 31,818 | $ | 209,532 | $ | 140,913 | |||||||||||||||
(1) The Company defines EBITDA as GAAP net income from Continuing Operations, adjusted for depreciation and amortization, net interest expense and taxes. | |||||||||||||||||||||||
(2) Adjusted EBITDA excludes the impact of the net gain on extinguishment of debt and 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 | $ | 104 | $ | 110 | |||||||
| Depreciation and amortization | 55 | 59 | |||||||||
| Interest expense, net of interest income | 21 | 24 | |||||||||
| Income tax expense | 40 | 42 | |||||||||
EBITDA (1) | $ | 220 | $ | 235 | |||||||
(1) The Company defines EBITDA as GAAP net income attributable to Sterling common stockholders, adjusted for depreciation and amortization, net interest expense, and taxes. | |||||||||||
We build and service the infrastructure that enables our economy to run, our people to move, and our country to grow. Q4 2022 Earnings Call February 28, 2023
2Sterling | STRL: Fourth Quarter 2022 DISCLOSURE: Forward-Looking Statements This presentation contains, and the officers and directors of the Company may from time to time make, statements that are considered forward- looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. 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; our expected margin growth; and our plans, objectives, expectations, forecasts, outlook and intentions. All of these types of statements, other than statements of historical fact included in this presentation, 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 presentation 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 presentation 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. This presentation may contain the financial measures: adjusted net income, EBITDA, adjusted EBITDA, and adjusted EPS, which are not calculated in accordance with U.S. GAAP. If presented, a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measure will be provided in the Appendix to this presentation.
E-Infrastructure Solutions + Fastest growing segment in revenue growth + Provide value-added solutions to blue-chip customers in all major East Coast markets + Develop advanced, large-scale site development systems & services for data centers, e-commerce distribution centers, commercial, warehousing, transportation, energy and more Building Solutions + Serve the Nation's Top Builders in the Nation's Top Housing Markets: Texas & Arizona + Residential and commercial concrete foundations for single-family and multi-family homes, parking structures, elevated slabs and other concrete work Transportation Solutions + Enhanced business mix + Providing infrastructure solutions in the Rocky Mountain States and Texas + Infrastructure and rehabilitation projects for highways, roads, bridges, airports, ports, light rail, water, wastewater and storm drainage systems and more Sterling | STRL: Fourth Quarter 2022 3 WHO is Sterling? NASDAQ STRL Shares outstanding(1) 30.6M HQ The Woodlands, TX Market cap(1) $1,164M Employees ~3,200(3) Revenue(2) $1,769M Segments E-Infrastructure Solutions Building Solutions Transportation Solutions EBITDA(2) $209M Projects underway ~230(3) Total Backlog(3) $1.41B A market-leading infrastructure service provider of e-infrastructure, building and transportation solutions. A story of successful execution of multi-year strategic business transformation; born of a vision that levers our entrepreneurial spirit. We offer a customer-centric, market-focused portfolio of goods and services geographically positioned in the right markets. (1) Shares outstanding and Market Cap as of February 24, 2023. (2) Full Year 2022 Revenue and EBITDA from Continuing Operations. *See EBITDA Reconciliation in the Appendix page 13. (3) At December 31, 2022.
Sterling | STRL: Fourth Quarter 2022 4 Strategic Execution | Proven Results | Strong Growth Strategic Elements: Solidify the Base | Grow High-Margin Products | Expansion into Adjacent Markets Key Objectives: Bottom-line Growth | Risk Reduction | Exceed Peer Performance
+ Fourth Quarter and Full Year 2022 Results Sterling | STRL: Fourth Quarter 2022 5
Fourth Quarter and Full Year 2022 Results Highlights Continuing Operations + Revenues: $448.6 million and $1.77 billion, respectively + Net Income: $20.2 million and $96.7 million, respectively + Diluted EPS: $0.66 and $3.16, respectively + EBITDA(1): $49.9 million and $208.7 million, respectively + Cash Flow from Operations(2): $88.5 million and $219.1 million, respectively + Cash & Cash Equivalents(3): $181.5 million + Backlog(3): $1.41 billion with 14.3% margin + Combined Backlog(4): $1.69 billion with 14.2% margin Sterling | STRL: Fourth Quarter 2022 6 (1) The Company defines EBITDA as GAAP net income from Continuing Operations, adjusted for depreciation and amortization, net interest expense and taxes. See EBITDA reconciliation on page 14. (2) Cash from operations for the year ended December 31, 2022 includes both Continuing and Discontinued Operations. (3) Cash & Cash Equivalents and Backlog at December 31, 2022. (4) Combined Backlog includes Unsigned Low-bid Awards of $275 million at December 31, 2022.
Sterling | STRL: Fourth Quarter 2022 7 Quarterly Consolidated and Segment Results Continuing Operations ($ in millions) Q4 2022 Q4 2021 Revenues $ 448.6 $ 355.4 Gross Profit 69.0 52.5 G&A Expense (23.1) (23.0) Intangible Amortization (3.5) (2.9) Acquisition Related Costs (0.3) (3.9) Other Operating Expense, Net (5.0) (2.7) Operating Income 37.0 20.1 Interest, Net (5.6) (3.7) Gain on Extinguishment of Debt, Net — — Income Tax Expense (10.7) (4.6) Less: Net Income Attributable to NCI (0.4) (0.6) Net income from Continuing Operations $ 20.2 $ 11.3 Diluted EPS $ 0.66 $ 0.38 EBITDA (1) $ 49.9 $ 27.9 ($ in millions) Q4 2022 Q4 2021 E-Infrastructure Solutions Revenue $ 247.3 $ 127.2 Operating Income $ 29.8 $ 18.7 Operating Margin 12.1 % 14.7 % Transportation Solutions Revenue $ 126.5 $ 149.5 Operating Income $ 5.1 $ 4.2 Operating Margin 4.0 % 2.8 % Building Solutions Revenue $ 74.8 $ 78.7 Operating Income $ 8.3 $ 9.2 Operating Margin 11.0 % 11.7 % (1) The Company defines EBITDA as GAAP net income attributable from Continuing Operations, adjusted for depreciation and amortization, net interest expense and taxes. See EBITDA reconciliation on page 13.
Sterling | STRL: Fourth Quarter 2022 8 Full Year Consolidated and Segment Results Continuing Operations ($ in millions) 2022 2021 Revenues $ 1,769.4 $ 1,414.4 Gross Profit 274.6 203.5 G&A Expense (86.5) (69.2) Intangible Amortization (14.1) (11.5) Acquisition Related Costs (0.8) (3.9) Other Operating Expense, Net (13.3) (12.0) Operating Income 159.9 107.0 Interest, Net (19.7) (19.3) Gain on Extinguishment of Debt, Net — 1.1 Income Tax Expense (41.7) (24.9) Less: Net Income Attributable to NCI (1.7) (2.5) Net Income to STRL $ 96.7 $ 61.5 Diluted EPS $ 3.16 $ 2.11 EBITDA (1) $ 208.7 $ 138.1 ($ in millions) 2022 2021 E-Infrastructure Solutions Revenue $ 905.3 $ 468.8 Operating Income $ 121.5 $ 80.5 Operating Margin 13.4 % 17.2 % Transportation Solutions Revenue $ 542.6 $ 628.2 Operating Income $ 26.6 $ 19.9 Operating Margin 4.9 % 3.2 % Building Solutions Revenue $ 321.6 $ 317.4 Operating Income $ 36.7 $ 32.6 Operating Margin 11.4 % 10.3 % (1) The Company defines EBITDA as GAAP net income attributable from Continuing Operations, adjusted for depreciation and amortization, net interest expense and taxes. See EBITDA reconciliation on page 13.
Sterling | STRL: Fourth Quarter 2022 9 Increased EBITDA and Cash Flow Drives Liquidity Strategy Foward Looking EBITDA Debt Coverage Ratio 2.3 1.9 12/31/21 12/31/22 0 0.5 1 1.5 2 2.5 We expect to pursue strategic uses of our liquidity, such as, strategic acquisitions, investing in capital equipment and managing leverage. Capital allocation focus • Long-term shareholder value • Complementing organic growth in existing and new markets • Strong cash flow profile provides flexibility and drives liquidity strategy Sterling is comfortable with a forward looking debt/ EBITDA coverage ratio of +/-2.5X. 5-Year Credit Facility $424M Term Loan Borrowings $75M Revolving Credit Facility (Undrawn) Key Cash Flow Considerations FY 2022 FY 2021 Cash flows from Operations $219.1M $158.9M Net CAPEX $56.0M $42.5M • Cash at December 31, 2022 was $181.5 million • 2023 EBITDA guidance(1): $220M to $235M • Expected additional 2023 noncash expenses: $31M to $35M (Stock-based compensation, noncash interest expense, deferred taxes, etc.) • Scheduled term loan debt payments total $31.9M and $26.1M for 2023 and 2024, respectively (1) The Company defines EBITDA as GAAP net income attributable to Sterling common stockholders, adjusted for depreciation and amortization, net interest expense and taxes. See EBITDA guidance reconciliation on page 14.
Sterling | STRL: Fourth Quarter 2022 10 Contact Us Sterling Ron Ballschmiede, Chief Financial Officer Mary Morley, Investor Relations Sterling Infrastructure, Inc. Tel: (281) 214-0777 The Equity Group Inc. Jeremy Hellman Tel: (212) 836-9626 [email protected]
+ Appendix Sterling | STRL: Fourth Quarter 2022 11
Sterling | STRL: Fourth Quarter 2022 12 2023 Modeling Considerations(1) (1) In millions except for EPS and percentages. (2) See EBITDA guidance reconciliation on page 13. Revenue $1,900 to $2,000 Gross Margin 15% to 16% G&A Expense as % of Revenue ~5.0% Other Operating Expense Net $12 to $13 JV Non-Controlling Interest Expense $2 to $3 Effective Income Tax Rate 28% to 29% Net Income $104 to $110 Diluted EPS $3.33 to $3.53 Expected Dilutive Shares Outstanding 31.2 EBITDA(2) $220 to $235
2023 Modeling Considerations Continued* Sterling | STRL: Fourth Quarter 2022 13 * In Millions. Non-Cash Items FY 2023 Expectations FY 2022 Depreciation $40 to $44 $38.0 Intangible Amortization $15 $14.1 Debt Issuance Cost Amortization $2 to $3 $2.2 Stock-based Compensation $12 to $14 $10.3 Deferred Taxes $17 to $18 $36.5 Other Cash Flow Items FY 2023 Expectations FY 2022 Interest Expense, including Debt Issuance $21 to $24 $19.7 CAPEX, net of disposals $55 to $60 $56.0
Sterling | STRL: Fourth Quarter 2022 14 (1) The Company defines EBITDA as GAAP net income from Continuing Operations, adjusted for depreciation and amortization, net interest expense and taxes. (2) Adjusted EBITDA excludes the impact of the net gain on extinguishment of debt and acquisition related costs. Three Months Ended December 31, Twelve Months Ended December 31, 2022 2021 2022 2021 Net income from Continuing Operations $ 20,233 $ 11,270 $ 96,717 $ 61,457 Depreciation and amortization 13,253 8,456 50,575 32,503 Interest expense, net of interest income 5,645 3,663 19,706 19,266 Income tax expense 10,741 4,552 41,707 24,874 EBITDA from Continuing Operations(1) 49,872 27,941 208,705 138,100 Gain on extinguishment of debt, net — — — (1,064) Acquisition related costs 265 3,877 827 3,877 Adjusted EBITDA from Continuing Operations(2) $ 50,137 $ 31,818 $ 209,532 $ 140,913 STERLING INFRASTRUCTURE, INC. & SUBSIDIARIES EBITDA FROM CONTINUING OPERATIONS RECONCILIATION (In thousands) (Unaudited)
Sterling | STRL: Fourth Quarter 2022 15 (1) The Company defines EBITDA as GAAP net income attributable to Sterling common stockholders, adjusted for depreciation and amortization, net interest expense and taxes. Full Year 2023 Guidance Low High Net income attributable to Sterling common stockholders $ 104 $ 110 Depreciation and amortization 55 59 Interest expense, net of interest income 21 24 Income tax expense 40 42 EBITDA (1) $ 220 $ 235 STERLING INFRASTRUCTURE, INC. & SUBSIDIARIES EBITDA GUIDANCE RECONCILIATION (In millions) (Unaudited)
THANK YOU We build and service the infrastructure that enables our economy to run, our people to move, and our country to grow.