Sterling Infrastructure, Inc. (STRL) research, news, and more from GeoInvesting

Company description

Wed, 06 Mar 2013 05:00:00 GMT

Sterling Construction Company, Inc., a heavy civil construction company, engages in the building, reconstruction, and repair of transportation and water infrastructure. Its transportation infrastructure projects include highways, roads, bridges, and light rail and commuter rail; and water infrastructure projects comprise water, wastewater, and storm drainage systems. The company also provides general contracting services, such as excavating, concrete and asphalt paving, installation of large-diameter water and wastewater distribution systems, construction of bridges and similar large structures, construction of light and commuter rail infrastructure, concrete and asphalt batch plant operations, and concrete crushing and aggregates operations. It serves public sector customers, including county and municipal public works departments, regional transit and water authorities, port authorities, school districts, and municipal utility districts, as well as private customers primarily in Texas, Utah, Nevada, Arizona, and California. The company was formerly known as Oakhurst Company, Inc. and changed its name to Sterling Construction Company, Inc. in November 2001. Sterling Construction Company, Inc. was founded in 1954 and is headquartered in Houston, Texas.

Research

Tue, 31 Oct 2017 14:12:10 GMT

Sterling Construction Company (NMS:STRL) ($15.45; market cap $417.6 million), a leading heavy civil construction company,announced its Q317 results:

Revenues at $304.2 million vs. $205.6 million in prior year and well ahead of analyst estimates of $262.9 million
Diluted EPS at $0.26 vs. $0.10 in prior year and ahead of analyst estimates of $0.22

Comments from management:

“The Sterling Team was able to deliver another strong quarter in some very adverse conditions,” stated Joe Cutillo, Sterling’s Chief Executive Officer. “Even with the impact of one of the worst hurricanes in Texas history, we were still able to improve our Heavy Civil performance, and deliver strong top line and bottom line growth in the third quarter to exceed our expectations. In addition to improved Heavy Civil performance, our Residential Construction segment contributed approximately $40 million in revenues as the business completed the highest number of concrete slabs for a single quarter in its history. We also executed well on some large projects in the Rocky Mountain region. The net impact of Hurricane Harvey on our third quarter was not significant as the productivity lost on Gulf Coast projects was largely offset by emergency work that resulted from the storm related flooding.”

Given the strong year-to-date performance, the company raised guidance ranges for full year 2017 as follows:

Revenues of $915 - $935 million (earlier $850- $880 million) above analyst estimates of $874.7 million
Net income of $11.0 - $12.5 million (earlier $9.0 - $11.0 million). Using the midpoint of 11.75 million would equate to EPS of $0.43, above analyst estimates of $0.39

The management further quoted:

“Looking beyond 2017, we expect to benefit from a macro environment that continues to provide a steady stream of heavy civil project opportunities across our geographies. Additionally, for our residential business, we anticipate that the Dallas-Fort Worth Metroplex will continue growing at low double digit percentages and we are on track to begin an expansion of our Residential Construction operations in the Houston market in the first half of 2018. Collectively, we expect these factors to lead to top-line growth in the mid-to-high single digits which, combined with our leveragable cost structure and our shifting mix towards higher margin business should lead to margin expansion and increased cash flow. As a result, we anticipate that our balance sheet will further strengthen, providing us with greater financial flexibility to reinvest in our business and pursue attractive growth opportunities.”

Investors should note that the backlog was down 12.9% to $804 million from the previous quarter.

Research

Tue, 12 Sep 2017 15:25:14 GMT

STRL ($14.33) announced it has been awarded a $26 million road project in Texas. The project is slated to begin later this month and be completed in the spring of 2019. We added STRL (Heavy Construction) to our Hurricane Harvey screen on August 30, 2017 when the stock was trading at $11.99.

Research

Thu, 07 Sep 2017 17:19:51 GMT

STRL ($13.10) provided an update on the impact of Hurricane Harvey to its operations:

“The impacts of the storm were centered almost entirely on the Gulf coast region, where Sterling generates less than 10% of total Company revenues. With respect to the gulf coast projects, 90% have resumed construction as of today. The remaining projects should return to work by the end of September. The Company’s other heavy civil operations in Texas, specifically Dallas and San Antonio, experienced minimal weather delays from Harvey. Sterling’s residential concrete business which operates in the Dallas-Fort Worth market was not affected by the storm.”

“It is anticipated that TX-DOT lettings of previously-approved projects will remain on schedule, and requests for proposals for emergency repairs related to storm damage will begin being released the week of September 11th.”

We added STRL (Heavy Construction) to our Hurricane Harvey screen on August 30, 2017 when the stock was trading at $11.99. We will take a deeper dive into how much of Texas STRL covers.

Acquisition Activity

Tue, 04 Apr 2017 14:07:05 GMT

STRL ($8.88) announced it completed its previously announced acquisition of Tealstron Construction for approximately $85 million. Management stated:

“We are excited about this transaction on many different levels. We view the acquisition of Tealstone as the next step in transforming the Company. In addition to its revenue and income, it is key to advancing our strategy of expanding into adjacent markets. The strong talent of the Tealstone management team and the relationships they have established with their customers will allow for growth opportunities with their existing customers into our other markets. Tealstone’s expertise also allows for further expansion of our commercial projects in the Texas market, the ability to lever commercial business with our airport efforts while also allowing for further diversification into the private sector. We worked hard to close this transaction in a timely manner, and will now move quickly to realize the true potential of Tealstone as a part of the Sterling team. We intend to update our previous guidance to incorporate Tealstone when we announce our first quarter results in early May. Based on the timing of the transaction, we intend to incorporate 8 months of operating results in our full year consolidated results.”