Sterling Construction Awarded $14 M Project in Hawai
Sterling Construction Company, Inc. STRL announced that its affiliate, Road and Highway Builders, LLC has been awarded a reconstruction project worth $13.9 million by the Hawaii Department of Transportation (HDOT). The project entails cold milling and paving of a 10-mile stretch of the King Kamanhameha highway, along with the reconstruction of four bridges.
This project award follows on the success of a much smaller project handled by Sterling Construction in Feb 2015, which required implementation of safety improvements on the King Kamanhameha Highway. The current project is likely to start in the fourth quarter of 2015 and expected to be completed within a year.
Sterling Construction reported a loss of 13 cents per share in second-quarter 2015 as against earnings of 7 cents per share in the year-ago quarter. Sales decreased 8.9% year over year to $177.4 million in the quarter. Sterling Construction expects to return to profitability by the third quarter of 2015 driven by improvements in estimating, project management and contract administration processes. All of the company’s business units continue to win new awards at improved margins and do not anticipate any slowdown in bidding for the balance of 2015 and 2016.
Total backlog was $743 million as of Jun 30, 2015, marginally down on a sequential basis and up 2.2% year over year. Total backlog, however, excluded $57 million of projects where the company was the apparent low bidder but had not yet been awarded the contract. While revenues and backlog in 2015 may remain flat with year ago levels, the company is focused on bottom line profitability and remains well-positioned to generate increased earnings in 2016 and beyond.
Sterling Construction expects margins in backlog to increase by the end of this year to 7% or more as the company is trying to eliminate lower margin projects and add new projects at higher margins. The company anticipates that its general and administrative expense will remain in the range of 5.5% of revenues.
Houston, TX-based Sterling Construction is a leading heavy civil construction company engaged in building and reconstruction of transportation and water infrastructure projects in Texas, Utah, Nevada, Arizona, California and other states. Its transportation infrastructure projects include highways, roads, bridges, and light rail; and its water infrastructure projects comprise water, wastewater, and storm drainage systems.
Sterling Construction currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the sector include China Railway Construction Corporation Ltd. CWYCY, China Railway Group Ltd. CRWOY and Dycom Industries Inc. DY. All these stocks sport a Zacks Rank #1 (Strong Buy).
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