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Category: Sterling Construction Company (STRL)
Date: 4 November 2020 Stock price of Sterling Construction: $14.67 We cover the 3rd quarter 2020 earnings report of Sterling Construction Company (STRL) a construction firm active in heavily civil projects as well as specialised services. The group reported revenues of $383.5 million and net income of $15.16 million for the quarter.
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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 - Joe Cutillo, Sterling Chief Executive Officer. "
More About Sterling Construction Company
Sterling Construction Company, Inc., 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.
Overview of Sterling Construction's 3rd quarter 2020 earnings report
Consolidated Third Quarter 2020 Financial Results Compared to Third Quarter 2019:
Consolidated Financial Position and Liquidity:
Heavy Civil and Specialty Services Backlog Highlights:
Maintains Full Year Revenue and Income Guidance:
- 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.
Sterling Construction's management commentary on their 3rd quarter 2020 earnings
“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
“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.”
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.”
Sterling Construction Company (STRL) stock price over the last 5 years
The image below shows the stock price history of Sterling Construction Company (STRL) over the last 5 years. And it's been a pretty good time for Sterling Construction stockholders over the last 5 years. 5 years ago the stock was trading at $4.20 and its currently trading at $14.67. That's a very strong return of 248% provided over the last 5 years to Sterling Construction Company stockholders
The stock of Sterling Construction Company is trading at a lot closer to its 52 week high than it is to their 52 week low which is a clear indication that the short term sentiment and momentum of Sterling is positive at this point in time.
The stock of Sterling Construction Company is trading at a lot closer to its 52 week high than it is to their 52 week low which is a clear indication that the short term sentiment and momentum of Sterling is positive at this point in time.
Latest stock valuation of Sterling Construction Company
Next earnings release of Sterling Construction Company
It is expected that Sterling Construction Company will release their 4th quarter 2020 earnings report in early February 2021
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