The couple of troubled projects that hurt STRLs results were well known for at least a year. Is there more to read behind the CEO and COO "resigning" within a few days of each other recently? I can see one being the fall guy, but not both and not so long after the event.
At 12/31/14, Sterling has $144 million in cash, receivables and unbilled work - offset against $67 million in AP or net cash equivalent of $77 million. PPE at cost is 50% depreciated at $87 million (book value). Tangible equity of $86 million or $4.78 per share.
The company has been profitable each year except for 2013. Revenues have grown nicely from $249 million in 2006 to $672 million in 2014. If the company is able get realize 4% operating margins on the $767 million in backlog, they will earn $30 million pre-tax. With the NOL carryforwards, they would pay some AMT tax but still have net income of $25 million. This equates to $1.38 EPS. This is obviously the upper end of earnings potential, but shows the great upside.
The balance sheet should give Sterling the opportunity to find another lender at same or lower interest rates.
Nice analysis: Let me add two more.
1) CEO and COO abruptly leave the company with no explanation. BAD.
2) Secondary offering of 2.1 million shares last year at 6.90. The unprofitable contracts were known then. I assume "smart money" purchased the stock. GOOD
My opinion is that Sterling will come out of this okay. The company has $90 million in tangible equity, solid quick and current ratios and less than $1 million in current debt. It is frightening that the stock continues to fall.
Sterling should benefit from this.....
The Senate has approved a $15 billion transportation revenue package that includes an incremental gas tax increase of 11.7 cents over the next three years.
The chamber passed the revenue bill Monday on a 27-22 vote and negotiations with the House will begin.
Under the 16-year plan, the gas tax would increase in three stages: a 5-cent increase would take effect this summer, a 4.2-cent increase would follow next year, and then a final 2.5-cent increase would take effect the following year.
The Senate proposal includes more than $8 billion for road projects across the state and puts money toward transit and local rail projects, as well as bike paths and pede
Considering the challenges in the highway and oil and gas industries, Astec had a strong 4Q. I think the estimates of 2.17-2.35 for 2015 will be a stretch. The aggregates segment should remain strong.
Look back 2+ years ago and Black Rock was a 8 to 10% holder in Alpha Natural Resources, and Walter Energy. They kept most of the investment as the two stocks fell over 80%. The amazing part was they had kept a large portion of the investment as both stocks fell to $1/share.
I doubt Terex will see similar declines, but don't assume Black Rock is a good indicator to buy.
If there is a long-term bill, they should generate more sales from pavers, graders and compaction rollers. However, look at the historic performance of their Construction segment. They rarely make money in that segment.
Don't forget they did a secondary last April for 2.1MM shares at a much higher price. In hindsight, it appears to have been a good move.
This industry is really suffering.
The executives own 30% of the stock. If they wanted to pay out a special dividend of say $5/share, they would benefit the most. It would be about a $15 million payday, which would be taxed at long-term cap gains. This dwarfs the paychecks they receive taxed at ordinary income.