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Sterling Reports 2020 Third Quarter Results

·15 min read

Strong Profitability and Cash Flow Further Enhance Liquidity Position

Record Backlog Provides Visibility Into 2021 Growth

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.

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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20201102005996/en/

Contacts

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