Sterling Infrastructure, Inc. · NASDAQ:STRL
Sterling Infrastructure — Sterling Construction — Investor Presentation (March 2019)
15 slides from Sterling Infrastructure's investor presentation, Mar 18, 2019
Slide 1: Investor Presentation March 2019
Investor Presentation March 2019
Slide 2: Disclosure: Forward-Looking Statements
Disclosure: Forward-Looking Statements This presentation contains, and the officers and directors of the Company may from time to time make, statements that are considered forward–looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. These forwa
Slide 3: Company Overview
Company Overview Sterling Construction is a leading heavy civil and residential construction company with strong competitive positions in the Western U.S. NASDAQ: STRL HEAVY CIVIL CONSTRUCTION - 85% of Revenues HQ: The Woodlands, TX Heavy highway, commercial concrete projects, aviation, and Employee
Slide 4: Investment Considerations
Investment Considerations ◼ Organic diversification of end-markets driving significant margin and EPS growth. ◼ Attractive geographic footprint with favorable funding environment. ◼ Strong balance sheet positions the Company for accretive M&A and debt restructuring. ◼ Disciplined project execution w
Slide 5: Enhanced Business Model & Attractive Valuation
Enhanced Business Model & Attractive Valuation Enhanced Business Model As Sterling continues to evolve into a more diversified specialty E&C company, our differentiated strategy allows the Company to be less dependent on lower margin heavy highway work and capture the upside in end-markets that have
Slide 6: Geographic Footprint Supported by Growth & Migration
Geographic Footprint Supported by Growth & Migration The south and west have the strongest construction growth rates in the U.S. as people are migrating into the Sterling footprint more than anywhere else in the country Population Change by State Sterling Footprint Source: U.S. Census Bureau 6
Slide 7: Residential Growth Continues Despite Housing Narrative
Residential Growth Continues Despite Housing Narrative Strong Market Unique Business Sustainable Dynamics Model Growth ▪ Only participate in developments where we have 100% of the slab work Dallas/Fort Worth ▪ Preferred partner to established Austin/San Antonio Houston homebuilders who want us to ex
Slide 8: Margin Expansion in Core Heavy Civil
Margin Expansion in Core Heavy Civil BID DAY STRATEGY Pricing Ensure all project bids have a strategy to maximize profit margins. LEVERAGE COST WITH GROWTH HIGHER Efficiency Maximize existing cost structure for profit growth opportunities. Integrate SG&A and indirect cost reductions into business un
Slide 9: Continued Focus on Adjacent Market Expansion
Continued Focus on Adjacent Market Expansion $2-$3 We can make $2-$3 in areas such as Residential, Aviation, Commercial, Rail, Port & Industrial with: ▪ Less risk $1 ▪ Higher margins ▪ Customers value relationships We can make $1 doing Heavy Highway work for a DOT: ▪ More risk ▪ Lower margin ▪ Custo
Slide 10: Our Vision: Strategy Execution Leads to 12%+ Blended Margin & 50/50 Revenue Mix 2021
Our Vision: Strategy Execution Leads to 12%+ Blended Margin & 50/50 Revenue Mix 2021 Blended Margin Expansion into 3 Adjacent Markets Heavy Civil % of Revenue Trend 15%+ margins 100% 12% 10% 2 Grow High 90% Margin Business 80% 42% 50% 50/50 Split at 12%+ 70% Further Solidify margin 60% 1 the Base 50
Slide 11: Financial Overview – Foundation for Continued Growth
Financial Overview – Foundation for Continued Growth Revenue ($ in mm) Gross Margin $1,200 12% $1,000 10% $800 8% $600 6% $400 4% $200 2% $- 0% 2016 2017 2018 2016 2017 2018 Net Income ($ in mm) EPS $30 $1.00 $25 $0.80 $20 $0.60 $15 $0.40 $10 $5 $0.20 $- $- 2016 2017 2018 $(5) 2016 2017 2018 $(0.20)
Slide 12: Strong Liquidity Position Provides Flexibility
Strong Liquidity Position Provides Flexibility Cash and Cash Equivalents Strong balance sheet allows for $100 enhanced shareholder value $90 $80 through multiple actions: $70 ▪ Dry powder for accretive M&A $60 $50 ▪ Debt repayment and future debt $ in $ mm $40 restructuring to lower our cost of $30
Slide 13: M&A Could Further Enhance Earnings Power
M&A Could Further Enhance Earnings Power Key Criteria Successful M&A Track Record ▪ Serves non-heavy highway end markets with ▪ Acquired Tealstone Construction on 3/9/17 for high margins $85 million ▪ ▪ Diversification requirements fulfilled with Growth at a reasonable price higher margin, value-add
Slide 14: FY'2019 Guidance & Modeling Considerations
FY’2019 Guidance & Modeling Considerations* Revenue $1,075 - $1,095 Net Income $29 - $32 EPS $1.07 - $1.18 EBITDA $58 - $61 Gross Margin 10% - 10.5% G&A Expense as % of Revenue ~5% Other Expense Net $13 - $14 Net Interest Expense $10 - $11 Tax Expense $3 JV Non-Controlling Interest Expense $1 - $2 E
Slide 15: Investment Considerations
Investment Considerations ▪ Organic diversification of end-markets driving significant margin and EPS growth. ▪ Attractive geographic footprint with favorable funding environment. ▪ Strong balance sheet positions the Company for accretive M&A and debt restructuring. ▪ Disciplined project execution w
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