Sterling Reports Record Third Quarter 2024 Results and Raises Full Year Profitability Guidance
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 endedSeptember 30, 2024 - Cash and Cash Equivalents totaled
$648.1 million atSeptember 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
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
In
"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,"
(1) See the "Non-GAAP Measures" and "EBITDA Reconciliation" sections below for more information. |
(2)
Combined Backlog includes Unsigned Awards of |
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
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
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
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
Company Contact:
281-214-0795
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Three Months Ended |
|
Nine Months Ended |
||||
|
2024 |
|
2023 |
|
2024 |
|
2023 |
|
|
|
|
|
|
|
|
Revenues |
$ 593,741 |
|
$ 560,347 |
|
|
|
|
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 |
|
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|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
Revenues |
2024 |
|
% of |
|
2023 |
|
% of |
|
2024 |
|
% of |
|
2023 |
|
% of |
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 % |
|
|||
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|||
|
|
|
|
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 |
|
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 |
|
(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 |
|
|||
|
|||
|
Nine Months Ended |
||
|
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 |
|
|||||||
|
|||||||
|
Three Months Ended |
|
Nine Months Ended |
||||
|
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. |
|
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|
|||
|
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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