Company Announcements

Sterling Reports Record Third Quarter 2024 Results and Raises Full Year Profitability Guidance

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.