THE
WOODLANDS, Texas, Nov. 6, 2024
/PRNewswire/ -- Sterling Infrastructure, Inc. (NasdaqGS: STRL)
("Sterling" or the "Company") today announced financial results for
the third quarter 2024.
The financial comparisons herein are to the prior year quarter,
unless otherwise noted.
Third Quarter 2024 Results
- Revenues of $593.7 million, an
increase of 6%
- Gross margin of 21.9%, up from 16.4%
- Net Income of $61.3 million, or
$1.97 per diluted share, an increase
of 56% for both metrics
- EBITDA(1) of $100.8
million, an increase of 42%
- Cash flows from operations totaled $322.8 million for the nine months ended
September 30, 2024
- Cash and Cash Equivalents totaled $648.1
million at September 30,
2024
- Backlog at September 30, 2024 was
$2.06 billion
- Combined backlog(2) at September 30, 2024 was $2.37 billion
CEO Remarks and Outlook
"In the third quarter we delivered 6% revenue growth and a
remarkable 56% increase in diluted EPS. Our focus on margin
expansion continues to drive profitability growth well in excess of
revenue growth. Gross profit margins of 21.9% marked a new record,
and we continue to look for opportunities to drive further
expansion," stated Joe Cutillo,
Sterling's Chief Executive Officer. "We closed the third quarter
with combined backlog of $2.37 billion, which was in line with prior
year levels. What the backlog metrics do not capture is that our
business has moved toward large, multi-phase projects. As a result,
we have built a pipeline of high probability future phase work that
now totals over half a billion dollars. Our operating cash flow
generation in the quarter was again excellent at $152 million, driving our net cash position to
$326 million, and supporting share
repurchases of $20 million in the
quarter. Our business is performing very well and we feel great
about the opportunities ahead."
Mr. Cutillo continued, "In E-Infrastructure Solutions, we
achieved 89% operating income growth as operating margins expanded
over 1,100 basis points to reach 25.8%. This excellent margin
profile reflects our shift toward large mission-critical projects,
including data centers and manufacturing. E-Infrastructure revenue
increased 4% in the quarter, driven by strength in data center
work, which more than offset a tough revenue comparison in the
manufacturing market and some continued softness in the small
project market. Notably, data center-related revenue increased
approximately 90% in the quarter and now represents over 50% of
segment backlog.
Transportation Solutions had another excellent quarter,
delivering 18% revenue growth and 28% operating profit growth. The
transportation markets are the strongest that they have been in our
company's history, and we still have two and a half years remaining
under the Infrastructure Investment and Jobs Act (IIJA)
authorization.
In Building Solutions, revenue declined 10% and operating profit
declined 12%. Our residential concrete slab and plumbing businesses
were impacted by a slowdown in the Dallas market in the quarter, as prospective
homebuyers appear to be waiting on the sidelines in expectation of
future interest rate reductions. We remain very bullish on the
multi-year demand trends in our key geographies and anticipate a
rebound in 2025."
"We believe 2024 will be another excellent year for Sterling.
Given our strong results through the third quarter and backlog
position, we are raising our full year profitability guidance. The
midpoint of our 2024 guidance would represent 10% revenue growth,
32% net income growth and 21% EBITDA growth," Mr. Cutillo
concluded.
|
(1) See the "Non-GAAP Measures" and
"EBITDA Reconciliation" sections below for more
information.
|
|
(2) Combined Backlog includes
Unsigned Awards of $319.6 million at September 30,
2024.
|
Full Year 2024 Guidance
- Revenue of $2.150 billion to
$2.175 billion
- Net Income of $180 million to
$185 million
- Diluted EPS of $5.85 to
$6.00
- EBITDA(1) of $310
million to $315 million
Conference Call
Sterling's management will hold a conference call to discuss
these results and recent corporate developments on Thursday,
November 7, 2024 at 10:00 a.m.
ET/9:00 a.m. CT. Interested
parties may participate in the call by dialing (800) 836-8184.
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, primarily across the Southern, Northeastern,
Mid-Atlantic and Rocky Mountain regions and the Pacific Islands.
E-Infrastructure Solutions provides advanced, large-scale site
development services for manufacturing, data centers, e-commerce
distribution centers, warehousing, power generation and more.
Transportation Solutions includes infrastructure and rehabilitation
projects for highways, roads, bridges, airports, ports, rail and
storm drainage systems. Building Solutions includes residential and
commercial concrete foundations for single-family and multi-family
homes, parking structures, elevated slabs, other concrete work and
plumbing services for new single-family residential builds. 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."
|
(1) See the "Non-GAAP Measures" and
"EBITDA Guidance 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 for determining 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; 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 press release, are forward-looking statements. In some cases,
forward-looking statements can be identified by terminology such as
"may," "will," "could," "would," "should," "expect," "plan,"
"project," "intend," "anticipate," "believe," "estimate,"
"predict," "potential," "pursue," "target," "guidance," "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.
Noelle Dilts, VP Investor Relations
and Corporate Strategy
281-214-0795
|
STERLING
INFRASTRUCTURE, INC. & SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands,
except per share data)
(Unaudited)
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
593,741
|
|
$
560,347
|
|
$ 1,616,923
|
|
$ 1,486,251
|
|
Cost of
revenues
|
(463,942)
|
|
(468,480)
|
|
(1,297,477)
|
|
(1,240,368)
|
|
Gross
profit
|
129,799
|
|
91,867
|
|
319,446
|
|
245,883
|
|
General and
administrative expense
|
(30,672)
|
|
(25,237)
|
|
(85,826)
|
|
(72,592)
|
|
Intangible asset
amortization
|
(4,280)
|
|
(3,736)
|
|
(12,857)
|
|
(11,209)
|
|
Acquisition related
costs
|
(72)
|
|
(103)
|
|
(209)
|
|
(352)
|
|
Other operating
expense, net
|
(7,283)
|
|
(5,654)
|
|
(18,203)
|
|
(11,703)
|
|
Operating
income
|
87,492
|
|
57,137
|
|
202,351
|
|
150,027
|
|
Interest
income
|
7,591
|
|
4,150
|
|
19,798
|
|
8,327
|
|
Interest
expense
|
(6,286)
|
|
(7,257)
|
|
(19,463)
|
|
(22,516)
|
|
Income before income
taxes
|
88,797
|
|
54,030
|
|
202,686
|
|
135,838
|
|
Income tax
expense
|
(23,404)
|
|
(13,891)
|
|
(48,960)
|
|
(35,429)
|
|
Net income, including
noncontrolling interests
|
65,393
|
|
40,139
|
|
153,726
|
|
100,409
|
|
Less: Net income
attributable to noncontrolling interests
|
(4,072)
|
|
(786)
|
|
(9,478)
|
|
(1,927)
|
|
Net income attributable
to Sterling common stockholders
|
$ 61,321
|
|
$ 39,353
|
|
$
144,248
|
|
$ 98,482
|
|
|
|
|
|
|
|
|
|
Net income per share
attributable to Sterling common stockholders:
|
|
|
|
|
|
|
|
|
Basic
|
$
2.00
|
|
$
1.28
|
|
$
4.67
|
|
$
3.20
|
|
Diluted
|
$
1.97
|
|
$
1.26
|
|
$
4.63
|
|
$
3.17
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
30,735
|
|
30,800
|
|
30,875
|
|
30,733
|
|
Diluted
|
31,070
|
|
31,217
|
|
31,184
|
|
31,048
|
|
STERLING
INFRASTRUCTURE, INC. & SUBSIDIARIES
SEGMENT
INFORMATION
(In
thousands)
(Unaudited)
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
Revenues
|
2024
|
|
% of
Revenue
|
|
2023
|
|
% of
Revenue
|
|
2024
|
|
% of
Revenue
|
|
2023
|
|
% of
Revenue
|
|
E-Infrastructure
Solutions
|
$
263,899
|
|
45 %
|
|
$
253,948
|
|
45 %
|
|
$
689,687
|
|
43 %
|
|
$
719,936
|
|
48 %
|
|
Transportation
Solutions
|
227,251
|
|
38 %
|
|
192,996
|
|
35 %
|
|
608,995
|
|
37 %
|
|
455,223
|
|
31 %
|
|
Building
Solutions
|
102,591
|
|
17 %
|
|
113,403
|
|
20 %
|
|
318,241
|
|
20 %
|
|
311,092
|
|
21 %
|
|
Total
Revenues
|
$
593,741
|
|
|
|
$
560,347
|
|
|
|
$
1,616,923
|
|
|
|
$
1,486,251
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
E-Infrastructure
Solutions
|
$
68,076
|
|
25.8 %
|
|
$
35,945
|
|
14.2 %
|
|
$
146,922
|
|
21.3 %
|
|
$
103,381
|
|
14.4 %
|
|
Transportation
Solutions
|
18,573
|
|
8.2 %
|
|
14,487
|
|
7.5 %
|
|
42,154
|
|
6.9 %
|
|
29,649
|
|
6.5 %
|
|
Building
Solutions
|
11,249
|
|
11.0 %
|
|
12,848
|
|
11.3 %
|
|
39,837
|
|
12.5 %
|
|
35,029
|
|
11.3 %
|
|
Segment Operating
Income
|
97,898
|
|
16.5 %
|
|
63,280
|
|
11.3 %
|
|
228,913
|
|
14.2 %
|
|
168,059
|
|
11.3 %
|
|
Corporate G&A
Expense
|
(10,334)
|
|
|
|
(6,040)
|
|
|
|
(26,353)
|
|
|
|
(17,680)
|
|
|
|
Acquisition Related
Costs
|
(72)
|
|
|
|
(103)
|
|
|
|
(209)
|
|
|
|
(352)
|
|
|
|
Total Operating
Income
|
$
87,492
|
|
14.7 %
|
|
$
57,137
|
|
10.2 %
|
|
$
202,351
|
|
12.5 %
|
|
$
150,027
|
|
10.1 %
|
|
STERLING
INFRASTRUCTURE, INC. & SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEETS
(In thousands, except per
share data)
(Unaudited)
|
|
|
September 30,
2024
|
|
December 31,
2023
|
|
Assets
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
648,127
|
|
$
471,563
|
|
Accounts
receivable
|
329,882
|
|
252,435
|
|
Contract
assets
|
79,736
|
|
88,600
|
|
Receivables from and
equity in construction joint ventures
|
7,814
|
|
17,506
|
|
Other current
assets
|
18,086
|
|
17,875
|
|
Total current
assets
|
1,083,645
|
|
847,979
|
|
Property and equipment,
net
|
270,532
|
|
243,648
|
|
Operating lease
right-of-use assets, net
|
54,748
|
|
57,235
|
|
Goodwill
|
281,363
|
|
281,117
|
|
Other intangibles,
net
|
315,540
|
|
328,397
|
|
Other non-current
assets, net
|
17,757
|
|
18,808
|
|
Total
assets
|
$
2,023,585
|
|
$
1,777,184
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
$
160,199
|
|
$
145,968
|
|
Contract
liabilities
|
563,531
|
|
444,160
|
|
Current maturities of
long-term debt
|
26,425
|
|
26,520
|
|
Current portion of
long-term lease obligations
|
19,531
|
|
19,641
|
|
Accrued
compensation
|
43,198
|
|
27,758
|
|
Other current
liabilities
|
26,152
|
|
14,121
|
|
Total current
liabilities
|
839,036
|
|
678,168
|
|
Long-term
debt
|
296,185
|
|
314,996
|
|
Long-term lease
obligations
|
35,445
|
|
37,722
|
|
Members' interest
subject to mandatory redemption and undistributed
earnings
|
23,417
|
|
29,108
|
|
Deferred tax liability,
net
|
82,894
|
|
76,764
|
|
Other long-term
liabilities
|
15,666
|
|
16,573
|
|
Total
liabilities
|
1,292,643
|
|
1,153,331
|
|
Stockholders'
equity:
|
|
|
|
|
Common
stock
|
312
|
|
309
|
|
Additional paid in
capital
|
295,831
|
|
293,570
|
|
Treasury stock, at
cost
|
(48,901)
|
|
—
|
|
Retained
earnings
|
469,282
|
|
325,034
|
|
Total Sterling
stockholders' equity
|
716,524
|
|
618,913
|
|
Noncontrolling
interests
|
14,418
|
|
4,940
|
|
Total stockholders'
equity
|
730,942
|
|
623,853
|
|
Total liabilities and
stockholders' equity
|
$
2,023,585
|
|
$
1,777,184
|
|
STERLING
INFRASTRUCTURE, INC. & SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In
thousands)
(Unaudited)
|
|
|
Nine Months Ended
September 30,
|
|
2024
|
|
2023
|
|
Cash flows from
operating activities:
|
|
|
|
|
Net income
|
$
153,726
|
|
$
100,409
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
50,546
|
|
42,529
|
|
Amortization of debt
issuance costs and non-cash interest
|
877
|
|
1,334
|
|
Gain on disposal of
property and equipment
|
(3,280)
|
|
(4,102)
|
|
Deferred
taxes
|
6,107
|
|
10,188
|
|
Stock-based
compensation
|
13,753
|
|
10,975
|
|
Changes in operating
assets and liabilities
|
101,106
|
|
169,882
|
|
Net cash provided by
operating activities
|
322,835
|
|
331,215
|
|
Cash flows from
investing activities:
|
|
|
|
|
Acquisitions, net of
cash acquired
|
(4,827)
|
|
—
|
|
Disposition
proceeds
|
—
|
|
14,000
|
|
Capital
expenditures
|
(65,309)
|
|
(49,244)
|
|
Proceeds from sale of
property and equipment
|
7,834
|
|
9,607
|
|
Net cash used in
investing activities
|
(62,302)
|
|
(25,637)
|
|
Cash flows from
financing activities:
|
|
|
|
|
Repayments of
debt
|
(19,931)
|
|
(76,850)
|
|
Repurchase of common
stock
|
(50,596)
|
|
—
|
|
Withholding taxes paid
on net share settlement of equity awards
|
(13,408)
|
|
(4,579)
|
|
Other
|
(34)
|
|
(16)
|
|
Net cash used in
financing activities
|
(83,969)
|
|
(81,445)
|
|
Net change in cash,
cash equivalents, and restricted cash
|
176,564
|
|
224,133
|
|
Cash, cash equivalents
and restricted cash at beginning of period
|
471,563
|
|
185,265
|
|
Cash, cash equivalents
and restricted cash at end of period
|
648,127
|
|
409,398
|
|
Less: restricted
cash
|
—
|
|
—
|
|
Cash and cash
equivalents at end of period
|
$
648,127
|
|
$
409,398
|
|
STERLING
INFRASTRUCTURE, INC. & SUBSIDIARIES
EBITDA
RECONCILIATION
(In
thousands)
(Unaudited)
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
Net income attributable
to Sterling common stockholders
|
$
61,321
|
|
$
39,353
|
|
$
144,248
|
|
$
98,482
|
|
Depreciation and
amortization
|
17,363
|
|
14,857
|
|
50,546
|
|
42,529
|
|
Interest expense, net
of interest income
|
(1,305)
|
|
3,107
|
|
(335)
|
|
14,189
|
|
Income tax
expense
|
23,404
|
|
13,891
|
|
48,960
|
|
35,429
|
|
EBITDA(1)
|
100,783
|
|
71,208
|
|
243,419
|
|
190,629
|
|
Acquisition related
costs
|
72
|
|
103
|
|
209
|
|
352
|
|
Adjusted
EBITDA(2)
|
$
100,855
|
|
$
71,311
|
|
$
243,628
|
|
$
190,981
|
|
|
|
|
|
|
|
|
|
(1)
|
The Company defines
EBITDA as GAAP net income attributable to Sterling common
stockholders adjusted for depreciation and amortization, net
interest expense and taxes.
|
|
(2)
|
The Company defines
adjusted EBITDA as EBITDA excluding the impact of acquisition
related costs.
|
|
STERLING
INFRASTRUCTURE, INC. & SUBSIDIARIES
EBITDA GUIDANCE
RECONCILIATION
(In
millions)
(Unaudited)
|
|
|
Full Year 2024
Guidance
|
|
Low
|
|
High
|
|
Net income attributable
to Sterling common stockholders
|
$
180
|
|
$
185
|
|
Depreciation and
amortization
|
67
|
|
67
|
|
Interest expense, net
of interest income
|
—
|
|
—
|
|
Income tax
expense
|
63
|
|
63
|
|
EBITDA
(1)
|
$
310
|
|
$
315
|
|
|
|
|
|
(1)
|
The Company defines
EBITDA as GAAP net income attributable to Sterling common
stockholders, adjusted for depreciation and amortization, net
interest expense, and taxes.
|
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SOURCE Sterling Infrastructure, Inc.